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Last Updated:[06-12-2010 07:05:59 EDT] Zoom in Zoom out Back to Tradenews

US-Korea FTA Likely to Dent Japanese Exports



tradenews The US which has turned a price sensitive market especially post global recession will be an advantageous terrain for South Korean goods over the Japanese ones following the ratification of the FTA between the US and South Korea. In the absence of similar trade deal between Japan and the US, the former’s largest export market, the Koreans will have a price edge over the Japanese exports.

Toshiyuki Shiga, president of the Japan Automobile Manufacturers Association has already informed “Japanese makers are being compelled to fight [their South Korean rivals] against very heavy odds.” The Japanese government un-enterprising approach has been blamed for pushing the country’s exports to suffer from the likely price war after the implementation of US-Korea FTA.

According to the Yomiuri Shimbun daily, the Japanese business world, alarmed by the government’s stagnation in its handling of trade negotiations, is expected to heighten calls for a government decision as early as possible to take part in the multilateral Trans-Pacific Partnership trade liberalization talks. At the backdrop of a likely ratification of the US-Korea FTA, last month, Japan showed interest in joining the Trans-Pacific Partnership talks to offset the likely fallout of the new FTA.

At a glance, the new deal is expected to impact Japan’s exports, including automobiles and electronics, as they have been vying neck and neck with South Korean rivals in the US markets. Any kind of delay from Japan in inking a similar deal with the US is also feared to give an undue advantage for the South Korean merchandise to make a market penetration in the US which has been so far dominated by Japanese ones.

Under the deal, the US agreed to lift its 2.5 percent tariff on South Korean cars within five years after the commencement of the pact. Washington also agreed to reduce to zero all other merchandise tariffs on South Korean imports, currently standing at an average of 3.2 percent, in the same timeframe.

By Jose Roy




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