Aftermath of Korea US FTA

Before the US-Korea FTA I said that Korea would not and could not really allow free trade. Now that the agreement has been reached and the various industries have sounded off, I know I’m right.

While South Koreans are busy protesting in the streets and going on hunger strikes, American companies, especially the auto industry are complaining to anyone who will listen (but they aren’t in the streets). There are some who disagree:

Unfortunately, Ford and Chrysler don’t see the benefits. They, like the United Auto Workers, have said the South Koreans haven’t done enough. So have U.S. Sens. Carl Levin and Debbie Stabenow. General Motors is withholding comment.

Obviously, there must be a reson why Ford and Chrysler are lobbying against the FTA. Clearly they don’t think that business in Korea will pick up substantially even with the new tax system. Let’s say American car companies do twice as much business in Korea – they sell 10,000 cars a year instead of 5,000. Who cares?

Of course, GM might be in a better spot than Ford and Chrysler thanks to its acquisition of Daewoo:

GM Daewoo, created in 2002 after GM acquired the now-defunct Daewoo Motor, could be in a unique position to benefit from both ends of the deal. The company accounts for about 13 per cent of General Motors Corp’s total group production and exports some models, such as the Aveo, to the United States. The company exported 116,761 vehicles to the US last year.

The FTA doesn’ really change my stock strategy. It doesn’t turn me bullish on US automakers anymore than Ford and Chrysler are bullish on the agreement itself.

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