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

The thesis examines the updated trade patterns and determinant of complete passenger and road vehicle trade between the U.S and S. Korea. The main explanatory variable is the effect of S. Korea’s Non-Tariff Barriers (NTBs) on the automobile industry trade with its one of the biggest trading partner, the U. S. The patterns and performance of automobile industry trade and the effects of NTBs in S. Korean car market will be assessed by the Normalized Trade Balance Index, Grubel and Lloyd index and the regression that is by using multiple regression analysis approaches, more specifically.

The results of the thesis will highlight the trend of the road and passenger vehicle industry trade and the impact of NTBs on the volume/ value of trade in automobile sectors between the countries since the beginning of the 2000s. S. 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).