Speculation is rife that Seoul may ease regulations against U.S. auto imports on the prospect that Washington offers a compromise in the ongoing talks over a free trade agreement.

Yonhap news reported yesterday that the Korea Automobile Association said “it is not only American cars that will see an improvement in price competitiveness if Seoul simplifies its taxation system – American cars would see prices decline by no more than 6 percent.”

An 8 percent import tariff, which is almost three times more than the U.S. tariff of 2.5, is currently levied on American cars. The U.S. government wants Korea to further open the automotive sector by eliminating or reducing its 8 percent tariff and easing additional automotive taxes, which when applied raise prices by more than 12 percent, U.S. industry experts say. They criticize that Korea’s current system of auto taxes discriminates against larger vehicles.

Some other experts here have noted that a free trade agreement would not significantly increase the number of sales of U.S. automobiles. They project that only about 8,915 units would be sold annually.

Korea sold more than 4 million cars overseas in 2005, with 800,000 heading to the United States, while foreign car imports accounted for a mere 30,000 of the total of 1.3 million units sold at home.

American auto manufacturers sold only 3,811 vehicles in Korea in 2005.

South Korea sells more than 200 vehicles by each vehicle that US exports to the asian country.

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