Non-Tariff Barriers in South Korean Automobile Market - Essay Example

South Korea and the U.S share a great deal of interest in pursuing positive development in the automobile industry’s trade performance. Both countries substantially rely on the profits of the automobile trade for their economic growth and their market sizes are often large. (Dyer & Chu, 2000). Consequently, S. Korea and the U.S Free Trade Agreement is about to come into effect and one of the biggest issues that prolonged the deal while negotiating for the FTA was regarding the automobile, especially passenger vehicle industry trade.

President Obama and the U.S industry representatives claimed that the FTA deal regarding automobile trading regime is not fair if they start to trade bilaterally in the current condition and regulation. Opponents of recent FTA provision even claimed that the U.S automakers exaggerate the potential sales in S. Korea of cars produced in U.S. assembly plants (Schott, 2010). What are the causes of the U.S showing the lack of confidence for trading automobile goods with S. Korea under similar conditions and regulations?

It is important to understand that there is a big difference between the two countries. The U.S. automobile industry has been primarily served domestic demand, whereas that of S. Korea has been export-oriented after 1997 (Choi, 2010). In often cases, the situation is also being illustrated as the failure of U.S auto-manufacture to compete in the global market. For an extended time, Korea has very successfully used a whole armory of trade tools, starting with absolute imports bans.