US-South Korea Trade Agreement Aims To Eliminate Chicken Tax on Trucks

US-South Korea Trade Agreement Aims To Eliminate Chicken Tax on Trucks

The U.S. and South Korea have reached a deal on a permanent free trade agreement between the two countries that could see Korean-built pickup trucks imported into the U.S. without being subject to a 25 percent tax levied on most foreign-made pickups.

The so-called "chicken tax" originated in the early '60s during a trade dispute between the U.S. and Europe over U.S.-imported chickens, which were slapped with a special tax to protect West German farmers. The U.S. responded by slapping a 25 percent tariff on trucks imported from Europe.

Later, the tax became a way for U.S. automakers and the United Auto Workers union to keep pickups assembled in other countries out of the U.S., particularly low-cost compact trucks popular in the rest of the world.

The chicken tax on Korean-built pickups would remain at 25 percent for seven years after the agreement is signed but would be phased out in the eighth, ninth and 10th years, according to the trade pact. South Korea would have to eliminate a similar 10 percent tax on U.S. trucks imported into that country immediately.

Without the burdensome tax, South Korean auto manufacturers Kia and Hyundai could be encouraged to finally produce a pickup for U.S. buyers. The two brands have previously stated their desire to sell pickups here.

In 2007, when the Korean Free Trade Agreement was proposed, Kia Motors President Cho Nam-hong said, "Isn't it time for Kia Motors to make inroads into the (U.S.) pickup truck market?"

Kia also showed a pickup truck concept, called the Mojave (pictured above), at the 2004 Chicago Auto Show.

As part of the negotiated agreement, the U.S. would also remove a 2.5 percent import tariff on South Korean cars within four years, while South Korea would cut its current 8 percent tariff on U.S.-built cars immediately and phase it out within four years.

South Korea also agreed to allow the U.S. to export up to 25,000 cars a year that don't meet its tougher safety requirements.

The South Korean legislature and U.S. Congress have yet to approve the agreement.

Comments

another nail in the coffin for the US economy and the domestic auto industry. Kill manufacturing here, and keep bailing out the companies, sure that's a great way to run a country!

Now Mahindra trucks will come without tax as Mahindra owns Ssangyong .

Opening free trade agreements with countries like canada is great because all share same living standard and life style.

Still hoping for news on a next-gen US Ranger and Colorado...

LOL joke

i am sure the koreans will make a beautiful cheapA#### knockoff truck based on a RAM CHEVY or FORD

NO matter where the big three build there damn trucks i will put my money in them

Starting in RAM

their parts are 75% american

I believe ford is the same or higher

EITHER way it is sad that a cheap korean automaker can get all the american consumer's attention

Just look at their new cars selling like hot cakes
The same imbociles that buy these cars talk down upon the big three's offerings.

the sad part is these people dont know that hyundais engines are based off chrysler and mitsubishi blocks

these are WGE world engines
SO how the hell are consumers going to say hyundais are reliable????/

I personally know people that own older 2000 and up models as well

THEY ARE HORRIBLE IN RELIABILITY
AND no matter what the interior is cheap too

Now for the new engines that start in 2011 that may be a different case

they may be Hyundai designed but then again they were the ones that already designed horrible engines.

Look up my info on allpar

also the 2.4 engines in chrysler vehicles are mainly hyundai n mitsubishi design

HORRIBLE engines
I have repaired NEONS, sonatas, elantras, and eclipses with these motors

10 years? Who cares.

No sense getting your panties in a bunch over this news… yet. The Chicken Tax phase-out is set to span the next eight years. If Hyundai/Kia was serious about entering the US market with pickups, they would just set up operations on US soil and we’d start seeing hamsters driving crew cabs.

The (sorta) victory here is for US pickup brands hoping to enter the South Korean market with the tariff on US trucks eliminated completely and immediately. However, you have to wonder how much actual demand there is for big US pickups in South Korea. Maybe they could be advertised as nuke proof?

I suppose this gives Mahindra eight years to design Ssangyong or Mahindra pickups to be built in SK then send to the US to take advantage of the break.

The thing for US manufacturers to worry about with this deal is that it sets a precedent for other countries looking to avoid the Chicken Tax and work out a deal of their own.

They will be low cost to buy and sell like hot cakes,remember Hyundai is gaining in car sales,Toyota is slipping..

Many journelists say Toyota will fall way down in sales ,as it is doing now..and Hyundai will be the top Asian car maker in a few years !

With this so called green agenda (global warming lol) is to bankrupt the U.S and western countries and this governments crazy new mpg rules for trucks,small Korean 4 cyl trucks will be everywhere ! Reason why you should find out the content and character , views of the person you vote for ! Dont vote just on symbolism !! They want to force us into small crap trucks,ride bikes or take public transportation ! Watch, now these brain washed drones want electric cars and this government said it wants to bankrupt the coal industry and sky rocket electricity rates ! All of a sudden your electric car costs $500 to charge up !! Wake up people,look how bad its getting now,in 10 years your eco Boost will be a gas sucking beast,your Prius and Nissan Leaf,Chev Volt will be too expensive to drive..Why do you think they are pushing trains,busses for ?...Yes,their master communist plan for the Good Old U.S.A !!!

Robert,
The Neon didnt have the World engine 2.4.
Used the Chrysler 2.4 they made from 1995-2006.
The BMW Mini uses a Neon engine destroked to 1.6L.
The SRT-4 neon used a Chrysler 2.4,the Caliber 2.4 uses the new world engine.I have heard rumors of a 4 cyl based off the Pentastar style engines.

Hyundai had their own 2.4 4 banger,but in 2007 like Chrysler,Mitshubishi,the 1.8,2.0 and 2.4 are all the same blocks,different intake/exhaust setups.

The new 2.4 have been good engines,just around since 2006,I have not done any major repairs on them so far.It uses a timing chain instead of a belt,so that is alot more reliable.

Yes,the Hyundai 2.4 produced in pre 2006 cars are junk,as is the Mitshubishi engines and the Mitshubishi engines produced and put in Chrysler products and minivans over the years (3.0 v-6,2.5 v-6,2.6 4cyl)those Mitshubishi engines are garbage and tarnished Chrysler's reputation.Funny,the 1.8 and 2.0 Chrysler engines they put in some mitshubishi cars were bullet proof reliable,and Mitshubishi gave oil burning,tranny slipping clunkers to Chrysler.

if people don't WAKE UP AND START BUYING AMERICAN PROD. we will all be living in local parks in tents, look it is allready happening

The math is simple.

Make an incredible, efficient, reliable product that consumers want, coupled with reasonale union demands = Profitable comapny. You'll be successful reagrdless the origin of competition.

I think we have a gleaming example of this in this country. It's called Ford Motor Company.

I do not see what the big deal is.
It will be 2018 when the chicken tax starts to decrease and by 2020 it will be gone.
To bad they did not have a free trade agreement with Tailand as that is where the new Colorado/Canyon and a version of the global Ranger will be made.

@sandman 4x4 - government politicians were asleep at the helm.
They let greedy business leaders do what they wanted without proper oversight.
You had greedy people taking big risks.
That is partially why banks and big business collapsed.

Another reason is that the USA tends to be protectionistic. That makes people lazy, causing quality and productivity to drop.
How many products in your house have made in : China, Taiwan, Korea, India, Pakistan, etc. plastered on them?

I'm willing to bet that if you looked at the fine print in this agreement,it will be more beneficial to USA interests.

Protectionsim does not help anyone in the long run.

It friggin looks like the Chevy Cheyenne Concept Truck, hahahah lol!

http://gmauthority.com/blog/wp-content/uploads/2010/03/Chevrolet-Cheyenne-Concept-9.jpg

does this mean people will stop hating on Toyota and hate on South Korea automobiles? :p

Maybe Ford/Ram/Chevy will now have an encentive to change thier attitude of , whatever we build they will buy" and change it to , "lets listen to the public and build them what they want" probably never happen but we can only wish.

neh, I'm skeptical on this. Kia/Hyundai pickup trucks... should never exist, but what is even more sad is americans will actually buy them! This world is messed up as is, I think itll take a few catastrophes before any1 does anything.

That Kia concept truck actually looks pretty good. The body style reminds me of the old Studebaker pickups in the late 50's and early 60's. I wonder what those little "bumps" above the fenders are (possibly turn signal indicators)?

8 years. This will give the Kia/Hyundai truck fanboys lots of time to learn how to talk trash on PUTC.

I have a 2010 F-150. Put together in Detroit. Sticker says 55% american/canada parts. Where does the other 45% come from?

Also the 2009 Chevy Crew cab Z-71 I traded in was made in Mexico. Said so on the door sticker.

At least Kia and hyundai and building cars and suv's in Alabama and Georgia.

Govenment by the corporations for the corporations.
Doesn't matter who's in power it's the same thing over and over again.
Jobs will come back to the USA when we are all forced to work for Chinese equivalent wages. Problem is that no one will make enough money to afford to buy this stuff. The way things are going the economy will never get back to what it was.
I could care less about the "world economy" all i care about is the US economy (mine)
What's wrong with a little protectionism? It seemed to work back in the 60's.
8 Years is like the blink of an eye.

@ Jim F - the better approach would be to assist these countries with improving their standards of living and social conditions.
Protectionism in the '60s lead to the junk we were driving in the '70's and '80s.

@unni:

Given the current legal climate between Mahindra and GV-USA, I'm not counting on Mahndra trucks showing up real soon. Despite who's really at fault here, I feel Mahindra would have had a real chance on selling their trucks here if they had undegone the import process alone instead of contracting a third party to handle things.

I expect Tata and Great Wall to show up long before Mahindra does.

Excellent!!
Competition breads excellence!
Now there's a chance we won't have to bailout a "mediocrity ridden" GM a 2nd time... unlike Chrysler--hopeless...

Bring on the small pickups! I don't give a hoot who makes them. I'm tired of Detroit and, to be fair, Tokyo claiming that there's no market for them.

For you made-in-the-USA diehards, I'm betting that the Big Three can do better this time around than the Chevy Luv...or the Colorado :)

Please tell me that this is not true. America's chickens need the revenue!

Protectionism by the UAW and US automakers is one of the causes of the crappy cars made in the US during the 1970's and 1980's. Competition from foreign auto companies like Toyota and Subaru helped the big 3 realize that quality and fuel economy actually matters, and that simply stamping a "Made in USA" sticker on a crappy vehicle does not guarantee sales.

Perhaps this agreement will give one of the automakers (US or overseas) initiative to finally introduce a 4-cylinder compact diesel pickup that gets 30 mpg to US consumers.

I really like the diesel Ford Ranger sold in Australia and other nations-it's better than the gas hog V6/V8 american compact pickups that got the same fuel economy as a full size with a small V8 engine.

Free trade agreements gets the large trade deficits and more jobs lost in USA. This is what has happened with all the other free trade agreements and now its going to repeat.



Post a Comment

Please remember a few rules before posting comments:

  • Try to be civil to your fellow blog readers.
  • Stay on topic. We want to hear your opinions and thoughts, but please only comment about the specified topic in the blog post.
  • Your email will not be shown.

If you have a TypeKey or TypePad account, please Sign In

Home | Buy or Sell a Truck | News | Special Reports

Powered by Cars.com. By using this site, you agree to our terms of service | © 2011 Cars.com | Privacy Statement | Contact Us

Visit our partner: MovingTruck.com