U.S.-Korea Free Trade Agreement: Potential Economy-wide ... - USITC

Views of Interested Parties
The Industry Trade Advisory Committee on Automotive Equipment and Capital Goods
(ITAC 2) and U.S. auto manufacturer General Motors (GM) stated that the expedited
alternate dispute resolution process for automotive products has the potential to discourage
the use of nontariff barriers. 150 Ford, the Labor Advisory Committee (LAC), the United
Automobile, Aerospace, and Agricultural Implement Workers of America (UAW), and U.S.
Representative Sander Levin, expressed concerns that U.S. auto firms face the burden of
proving that they have suffered “injury” under the alternate dispute resolution process for
automotive products before an appropriate trade remedy can be applied. 151 They said that the
threat of applying the prevailing MFN applied rate of duty of 2.5 percent would be
ineffective and objected to its application only to passenger cars and not to light pickup
trucks as well. 152 Moreover, Ford stated that it would have preferred a process in which the
MFN duty would be immediately reinstituted at the beginning of the dispute with
negotiations to follow. 153
In its report, the LAC stated that the process should allow participation of labor unions and
should require the selection of panelists with specialized experience. 154 LAC said that
safeguards resulting from this alternate dispute-settlement procedure should be permanent, 155
and that the alternate dispute settlement procedure for automotive products would not benefit
U.S. workers or the U.S. auto industry. 156 LAC also added that the provisions would not
prevent Korea from waiving or weakening its existing domestic labor laws and that the
provisions do not provide for adequate enforcement of the International Labor
Organization’s (ILO) core labor standards, particularly employment discrimination. 157 LAC
remarked that if goods from the Kaesong Industrial Complex (KIC), a free trade zone located
in North Korea, enter the U.S. market, then failure to enforce internationally recognized
labor rights in the KIC should be subject to the dispute settlement procedures in this chapter.
LAC added that its members object to three changes in the wording of this chapter from most
previous FTAs: (1) the phrase “or as the parties otherwise agree” in section 22.4 of this
chapter that will allow parties to alter the scope of what is subject to the dispute-settlement
provisions; (2) the FTA omitted the requirement in other FTAs that parties suspending
benefits as part of a dispute settlement must first attempt to apply such suspensions to the
same sector as was affected by the dispute; and (3) the FTA did not contain a requirement
as to the qualification criteria for panelists in section 22.9 of this chapter. Finally, LAC stated
150 ITAC (2) on Automotive Equipment and Capital Goods, Advisory Committee Report, April 27,
2007, 13.
151 Ibid., 9; LAC for Trade Negotiations and Trade Policy, Report, April 27, 2007, 26; Meyer, testimony
before the USITC, June 20, 2007, 220; and Congressman Levin, testimony before the USITC, June 20, 2007,
hearing transcript, 161–162.
152 Meyer, testimony before the USITC, June 20, 2007, hearing transcript, 220–222; Congressman Levin,
testimony before the USITC, June 20, 2007, hearing transcript, 161–162; ITAC (2) on Automotive
Equipment and Capital Goods, Advisory Committee Report, April 27, 2007, 11; and LAC for Trade
Negotiations and Trade Policy, Report, April 27, 2007, 20.
153 Biegun, testimony before the USITC, June 20, 2007, hearing transcript, 235.
154 LAC for Trade Negotiations and Trade Policy, Report, April 27, 2007, 26; and Meyer, hearing
transcript, 220.
155 LAC for Trade Negotiations and Trade Policy, Report, April 27, 2007, 25.
156 Ibid., 20.
157 Ibid., 7.
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