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

Express Delivery and Logistics Association 36
In hearing testimony, the Express Delivery and Logistics Association (XLA), whose
members include large firms with global delivery networks and smaller businesses with
strong regional delivery networks, said that it strongly supports the FTA. XLA noted that
previous bilateral FTAs have resulted in increased shipping volumes for their members
because of increases in trade, assurances of market access, and improved customs
procedures.
According to XLA, the Korean Postal Law raises legal complications on paper for the
operation of U.S. express delivery firms in Korea, but the industry maintains de facto market
access rights. The FTA will provide legally enforceable market access and national treatment
rights. Additionally, the FTA will provide a 4-hour customs-clearing target, which is
superior to the 6-hour customs-clearing target included in previous FTAs.
Ford Motor Company 37
In written and hearing testimony, Ford Motor Company, a U.S.-based manufacturer of
automotive products, stated that it does not support the U.S.-Korea FTA. In his testimony
before the Commission, Mr. Stephen Biegun of Ford noted that Ford has operated in Korea
since 1995, and despite 12 years of investment and effort, Ford currently has one remaining
dealership in Korea and sells just 1,700 vehicles in Korea each year. Mr. Biegun said that
96 percent of the vehicles sold in Korea are built in Korea, and said that this “would be
impossible to sustain without the active intervention of the Korean government.” The 1995
and 1998 Memoranda of Understanding were intended to reduce NTBs and increase market
access, but “the real effects of the agreements were minimal.” Korea safety and
environmental regulations are “nontransparent and out of sync with international standards,”
and said that the cost of these regulations is proportionately much higher for importers than
for Korean domestic automakers because importers must amortize the cost across a much
smaller amount of sales.
Mr. Biegun stated “the changes can be so costly as to destroy the business case to remain in
the Korean market.” According to Mr. Biegun, the U.S. industry prenegotiation proposal to
tie U.S. tariff liberalization to measurable market access in Korea as a way to “incentivize”
the Korean government to dismantle its import barriers. He added that his company was
disappointed that the burden of proof with respect to trade remedies will continue to lie with
U.S. companies, which effectively means that they will have “to litigate our way into the
Korean market.” He was disappointed that the 25 percent U.S. truck tariff was not included
as part of the snapback provisions, and stated that “instead of using the leverage of U.S.
tariffs to drive market access into Korea, this agreement gives away the U.S. tariff and
merely established another legal obstacle course for U.S. companies seeking market access
into Korea.” The agreement will merely provide temporary relief from current NTBs, and
that new NTBs will arise in the future. He said that the “only option that would really make
a convincing business case for a U.S.-based exporter would be to take the small-volume
exceptions that were carved into each of the NTBs.”
36 James Min, chair, Trade Subcommittee, Express Delivery and Logistics Association, testimony before
the U.S. International Trade Commission, June 20, 2007.
37 Stephen Biegun, vice president, International Governmental Affairs, Ford Motor Company, testimony
before the U.S. International Trade Commission, June 20, 2007; and posthearing submission, June 27, 2007.
7-18