U.S. and South Korea’s free-trade agreement and the effect on automakers
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TEXT OF INTERVIEW
CHIOTAKIS: Now that the U.S. and South Korea have reached a deal on free-trade, what does that mean for American automakers?
Marketplace’s Rob Schmitz is with us now from Shanghai to sort it all out. Hi Rob.
ROB SCHMITZ: Hey, Steve.
CHIOTAKIS: Rob, the Obama administration says this will create tens of thousand of American jobs. U.S. automakers and the autoworkers union both say they are happy with this — how will this help the U.S. economy?
SCHMITZ: It’ll help just by leveling the playing field a bit. The big part of this agreement that got U.S. automakers on board was the elimination of some very picky safety standards South Korea places on imported cars. These rules are so strict that U.S. automakers don’t even bother selling their cars in Korea all that much. And that’s why South Korea — to steal a nickname from its neighbor-is the ‘hermit kingdom’ of cars — 94 percent of all car sales there are domestic models. I spoke with auto industry expert Michael Dunne today. He says this agreement should change that.
MICHAEL DUNNE: First of all, it’ll open things up and let cars come in and compete. That’s the first step. It’ll introduce cars and models and brands that the Koreans may not even be aware of.
CHIOTAKIS: Ok, so now that U.S. automakers have better access to the so-called “hermit kingdom” — will South Koreans want what they’re selling?
SCHMITZ: Koreans like to buy smaller engine, fuel-efficient cars — the U.S. is obviously not known for these types of cars. But that’s changing. Ford is manufacturing and selling its tiny Figo model in India, and it’s using its Ford Focus model to compete with both KIA and Hyundai in Europe, so Ford, for one, seems prepared for this.
CHIOTAKIS: That’s Marketplace Asia Bureau Chief Rob Schmitz joining us from Shanghai. Thanks, Rob.
SCHMITZ: Thanks, Steve.
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