U.S. auto industry, agriculture lobby face off over Korea FTA

U.S. agriculture groups and automobile companies are stepping up pressure on the Bush administration as it moves to complete a free trade agreement (FTA) with Korea by the end of the month.

More than a dozen farm groups are lobbying the administration in Korea this week to ensure it only concludes a deal that significantly increases U.S. agriculture exports. But agriculture’s interests are somewhat complicated by those of the auto industry, which has warned it could oppose the deal unless it ensures that U.S. exports to Korea will increase.

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“There’s been an impenetrable wall against our exports,” said Rep. Sandy Levin (D-Mich.), the chairman of the Ways and Means trade subcommittee who has scheduled a hearing today during which auto-industry representatives will testify. Levin last week told The Hill that his constituents have asked how it is possible that Korean companies sell more than half a million vehicles per year in the U.S. while only about 4,000 U.S.-made vehicles are sold in Korea.

Because of this disparity, Levin and Ways and Means Chairman Charles Rangel (D-N.Y.) have called for the U.S. to exclude the 25 percent U.S. tariff on foreign trucks from the talks. They also have said Korean tariffs on U.S. vehicles should be eliminated immediately, but want U.S. auto tariffs reduced over 15 years and a safeguard put in place that could re-impose the current U.S. tariff on Korean vehicles if Korea’s exports increase significantly from the FTA.

Most farm groups are in a different position, since Korea is a huge export market for U.S. agriculture products. “It’s very interesting to us because it’s the first time in a long time where U.S. agriculture is not in the most difficult position with a trade deal,” Chris Garza of the Farm Bureau said.

Some agriculture products are still hit by enormous tariffs, and Korea would like to exclude tariffs on rice, oranges and lemons from reductions. It also has placed restrictions on U.S. beef since the first case of mad cow disease was found in the U.S.

“Because this agreement has so much potential for California agriculture, we want to make sure we make great strides in this deal,” said Rayne Thompson of the California Farm Bureau, who also will be in Korea this week.

For example, Sunkist, a cooperative of 6,000 citrus growers in California and Arizona, could be a big winner in the Korean deal. However, a defensive position on autos could make it more difficult to convince Korea to lower barriers to fresh citrus since increasing access in the U.S. for its vehicles is a top Korean priority.

Sunkist exported about 6 million cartons of fresh oranges to Korea last year, according to Sunkist Senior Vice President Michael Wootton, who is attending this week’s talks. However, a carton of oranges is hit with a 50 percent tariff, and Korea wants to protect growers of mandarin oranges through an extremely slow reduction in this tariff.

Similarly, Korea wants to protect its 144 percent tariff on mandarin oranges and its 32 percent tariff on lemons, Wootton said. If those tariffs aren’t reduced through the FTA, Sunkist could lose out in the Korean market to competitors in China and Chile, which already has an FTA with Korea.

A spokesman for the Office of the U.S. Trade Representative (USTR) acknowledged the calls from agriculture and automobile groups, and said the administration’s goal is to conclude a comprehensive FTA with no exclusions. “Comprehensive means everything on the table,” USTR Spokesman Steven Norton said.

Agriculture groups could help pass a completed FTA through Congress if they are satisfied with what the deal delivers. Some sources said support from agriculture could trump opposition from the auto industry and its supporters, since agriculture groups could count on a wider number of members.

The unusual trip to Korea by farm groups comes during what might be the last negotiating sessions on the Korean FTA. Business leaders supporting the deal last week were telling other groups to prepare press releases hailing the FTA in anticipation of the conclusion of talks this week, business sources said.

The National Cattlemen’s Beef Association and groups representing California fruit producers also are attending the talks, sources said. Korea has imposed barriers to U.S. beef exports ever since the first case of mad cow disease was found in the U.S. in 2003, and it also has sought to exclude tariff reductions on rice.

Farm groups are wary the administration could lower its demands on Korea in order to conclude the talks before the end of March. The administration is under pressure to complete the deal in that timeframe since if the talks drag on past March, it will be unable to submit the deal to Congress for an up-or-down vote under fast-track authority, which expires this summer.
 
While the Office of the U.S. Trade Representative has been under pressure from Rangel, Levin and other Michigan lawmakers on autos, it is also under the scrutiny of several members of the California delegation. For example, staffers of Rep. Devin Nunes (R-Calif.) have been taking part in weekly conference calls on the Korea FTA that were set up for members of the House Ways and Means Committee.