Dec. 3 (Bloomberg) -- The U.S. and South Korea reached an agreement to change automobile provisions in a pending trade deal, winning support from Ford Motor Co. and lawmakers.
Both nations will scale back the initial tariff cuts for automobiles, and South Korea said it would allow more imports of U.S.-made vehicles that meet American standards and not Korean rules, according to fact sheets released today by the White House. The U.S. will also keep its 25 percent tariff on truck imports for eight years instead of beginning to phase it out immediately.
With almost $68 billion in trade between the nations, a deal would be the U.S.’s largest since the North American Free Trade Agreement in 1994 and would help Obama meet his goal of doubling American exports in five years. It has been supported by companies such as Citigroup Inc. and Caterpillar Inc.
Obama and South Korea President Lee Myung Bak failed to seal a deal during a summit in Seoul last month, and trade negotiators from both nations spent this week in Columbia, Maryland, seeking to resolve differences. The agreement will need to be approved by Congress before it goes into effect.
Under the terms of the reworked deal, the U.S. will end its 2.5 percent tariff on automobiles in five years, instead of immediately or after three years as was previously agreed. Korea will cut its 8 percent tariff on U.S. automobile imports to 4 percent immediately, instead of eliminating it entirely, according to a White House fact sheet.
“These new provisions provide Ford greater confidence that we will be able to better serve our Korean customers,” Chief Executive Officer Alan Mulally said in an e-mailed statement.
“This was the only way to reverse the historic, lopsided pattern of one-way trade with South Korea,” Michigan Democrat Sander Levin, chairman of the House Ways and Means Committee and a critic of the earlier accord, said in a statement. “I support today’s agreement.”
The two sides didn’t announce any changes on beef trade, and it wasn’t clear how that would affect prospects for the accord in the Senate. Finance Committee Chairman Max Baucus had demanded that Korea drop restrictions on imports of U.S. beef from older cattle.
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