South Korea Free Trade Deal Could Be Boon For GM The Obama administration and the South Korean government have reached a free trade deal that could offer a potential big market for General Motors and other American car companies. One expert says South Korea is an especially desirable market because of its huge middle class and sophisticated financial system.
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South Korea Free Trade Deal Could Be Boon For GM

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South Korea Free Trade Deal Could Be Boon For GM

South Korea Free Trade Deal Could Be Boon For GM

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GUY RAZ, host:

Foreign markets are an important part of GM's future. One new market that could soon open to GM and the other U.S. automakers is South Korea. The two countries have reached a free trade deal. The Obama administration says if Congress approves the pact it could create tens of thousands of new jobs.

NPR's Sonari Glinton reports.

SONARI GLINTON: Let's get an understanding of how lopsided trade is between the U.S. and South Korea right now. Take cars, for example. Last year, South Korean carmakers sold about 500,000 vehicles in the U.S. In South Korea, the U.S. car companies sold 6,000. Five hundred thousand to 6,000, thats just one of the imbalances the U.S.-Korea Trade Agreement seeks to correct.

Mr. RON KIRK (Trade Representative): It could have an economic impact that is larger than the last nine free trade agreements entered into by the United States.

GLINTON: That was U.S. Trade Representative Ron Kirk. He says the trade deal would create a minimum of 70,000 U.S. jobs, and it would touch almost every area of commerce. The key sticking point though has always been the auto industry.

Sean McAlinden is with the Center for Automotive Research. He says until recently the South Koreans have kept their auto market locked up tight.

Dr. SEAN MCALINDEN (Vice President, Research/Chief Economist, Center for Automotive Research): There was a point not too long ago that if you bought an import of any kind, that guaranteed you a federal tax audit that would obviously prevent a lot of import sales.

GLINTON: McAlinden says South Korea has been under tremendous pressure to open its markets to trade, and recently it has. The South Koreans have already signed a free trade deal with the European Union and eight other countries. And with its huge middle class, McAlinden says South Korea is a market Detroit must tap.

Dr. MCALINDEN: Sales growth in the auto industry in the United States and Europe is essentially stagnant. The growth in the next 20 years will be almost entirely in the developing world or in the new markets.

GLINTON: The three Detroit car companies agree. So do top Republicans in Congress. The United Auto Workers Union is backing the plan because of the major concession won for the auto industry. Other unions like the steelworkers union say they've been left out in the cold.

Thea Lee is with AFL-CIO, the nation's largest labor organization. She says this is just the latest in the long string of bad trade deals.

Ms. THEA LEE (Policy Director, AFL-CIO): It's an economically significant deal with a very powerful exporting country. And we didn't do enough to protect American jobs.

GLINTON: Lee says while the auto industry may be helped by the deal, the trade pact will only encourage U.S. manufacturers to move to South Korea in the race to find cheaper wages.

Ms. LEE: The companies are mobile; they can move production all around the world. They can make money wherever they are. American workers have to make a living on American soil. And so we need a different kind of trade agreement than a lot of the multinational corporations, and that's really the dividing point.

GLINTON: Recent polls have shown Americans increasingly skeptical of free trade, but the administration and congressional Republicans say approving the Korean trade deal will be a top priority in the new year.

Sonari Glinton, NPR News, Washington.

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