According to the Tire Industry Association (TIA),
positive results are expected as President Barack
Obama has signed into law a renewal of the
Generalized System of Preferences (GSP). The
measure was part of a trade pact originally agreed
to between the U.S. and South Korea in 2007, known
specifically as the KORUS FTA (Korean-United States
Free Trade Agreement).
“The renewal of the program removes 95 percent of
the existing tariffs within five years for goods
and services covered by the pact and gives
particular preference to the automotive sector for
both the importing and exporting of goods,
including tires,” reports Roy Littlefield, TIA’s
executive vice president.
“The agreement also provides greater access to the
Korean government procurement market for American
companies,” he adds.
KORUS FTA will reduce the tariff on the importing
of Korean manufactured car and truck radial tires
from 4 percent (3.4 percent for non-radial) through
a series of graduated step-downs every year to zero
starting in the fifth year of the agreement,
Littlefield says.
The duty free importing of tires from Korea will
extend for a total of 15 years when the free trade
agreement will be up for renewal.
For American tire manufacturers, the Korean import
duty of U.S.-made tires will go from the current 8
percent to zero beginning in the first year of the
agreement. Congress passed the long-anticipated
free trade agreement earlier this month. The Obama
administration estimates that American companies
paid nearly $2 million a day in additional duties
since the GSP expired at the end of last
year.
“This agreement is of particular benefit to
the American consumers who experienced a price hike
on tires in late 2009 when tariffs were imposed on
Chinese passenger and light truck tires imported to
the U.S.,” says Littlefield. “Korean tire exports
increased 63 percent due to the U.S. import duty on
Chinese-manufactured tires and an aggressive
manufacturing and marketing program by
manufacturers in the peninsula nation.”
The Korean Republic’s legislature is expected to
approve the agreement by the end of the month,
despite some opposition concerning the trade pact’s
impact on certain Korean industries, especially
agriculture.
For more information, visit www.tireindustry.org.
