U.S. Pressuring Korea on Trade Issues

It didn’t take long for U.S. industries, unions and Democratic Party to start putting pressure on its trading partners including Korea, after the U.S. November 7 midterm elections.

On November 14 (local time) at a meeting with President George W. Bush at the White House, CEOs of GM, Ford and DaimlerChrysler, the top three U.S. automakers, asked him for a solution to the problems facing them, saying, “The U.S. auto industry is having a difficult time due to Korea’s heavily protected auto market and Japan’s artificial devaluation of its yen.”

President Bush was said to have acknowledged the need to come up with a solution for medical coverage burden, but did not agree to intervene in the issue of the Japanese exchange rate. It was not confirmed as to what President Bush said in response to demand by U.S. auto industry that Korea open its auto market.

In an interview with Washington Post the previous day, a vice president of Ford Ziad Ojakli said, “The foreign share of the Korean auto market is just three percent,” and added that Ford sells more cars at a single dealer shop in northern Virginia than it sells in Korea as a whole. Auto labor groups, as well as the Democrats are also applying pressure on the Korean market.

The Washington Post reported that Democrat Sander Levin, who will become chairman of the House subcommittee on Ways and Means said that he demanded the reinforcement of Korean companies’ labor standards as a buffer, lessening the impact of U.S. auto workers at the Korea-U.S. FTA talks.

Levin’s constituency is Detroit in Michigan, the hub of the U.S. auto industry.

In addition, the Washington Post quoted a U.S. Congressional aide as saying, “Labor and environmental protection provisions are likely to be included at the Korea-U.S. FTA talks now that the Democrats have won the election.”

The Democratic Party and labor union organizations have so far maintained that products manufactured under poor working and environmental conditions by some Korean companies can be regarded as examples of unfair trade since they have elements lowering their costs compared to their U.S. counterparts.

srkim@donga.com