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Implications of Liberalizing Korea-U.S. Trade in the Automobile Sector: Potential Impact of the Korea-U.S. Free Trade Agreement
Published February 25, 2008
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The automobile industry is a dynamic and significant sec-tor in most of the major economies in the world. It is closely related to various other manufacturing sectors such as rubber, plastic, and chemicals; fabrics; steel; and mechanical, electric, and electronic equipment. Recently the automobile industry has been making progress toward further environmental friendliness, energy efficiency, and passenger safety with the use of information and communication technology. The automobile industry accounts for a signifi cant share of world trade as well. In addition, the world automobile industry is experiencing structural changes, a fact that is a matter of great concern in world trade and the world’s economies.
Korea’s automobile industry has developed rapidly; hence, its exports have increased signifi cantly during the past three decades or so. Its imports, however, have not grown impressively even considering the rapid growth in Korea’s domestic market for automobiles. This situation has generated major trade concerns and tension between Korea and the United States. Various efforts have been made to solve the problems bilaterally.
The free trade agreement between Korea and the United States (the KORUS FTA)—negotiations were concluded in April 2007—is expected to contribute to general solutions to the auto-industry problems between the two countries because the agreement contains comprehensive trade liberalization and deregulation measures.
The purpose of this paper is to review trends and major issues in international trade in the automobile industries in Korea and the United States from the viewpoint of bilateral trade, and then to examine their implications and the potential impact of the KORUS FTA.

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