South Korea could consider revising taxes levied on automobiles, which have become one of the key sticking points in the free trade agreement (FTA) talks with the United States, a government official said Wednesday.
Speaking on a radio talk show, Commerce and Industry Minister Kim Young-ju said policymakers are looking favorably at the auto tax issue. He did not elaborate on details.
The United States has repeatedly called on South Korea to reform its auto taxation policy which it claims hurts the price competitiveness of its cars vis-a-vis European and Japanese models.
They have urged Seoul to levy taxes based on sales price instead of engine capacity.
South Korea's auto tax is based on engine capacity and fuel efficiency. This means the heaviest taxes are slapped on cars that have large engines and not those that are the most expensive.
U.S. autos are cheaper than those of its rivals made in Europe and Japan, but are generally bigger in size and have larger engines.
Seoul already said it wants to replace the current five-tiered tax system based on car size to three. It, however, has not made clear its position on whether it will follow Washington's suggestion that could entail changing the existing tax codes.
On the controversial issue of trade dispute settlement and anti-dumping actions that have made little headway in the FTA talks, the official said South Korean negotiators plan to redouble their efforts to persuade their counterparts.
In the fifth round of talks held in early December in Montana, South Korea called for the creation of a joint trade dispute settlement committee and prior notification before anti-dumping investigations are conducted. Such demands are aimed at preventing anti-dumping actions from being used to limit South Korean exports.
Washington has said that it cannot take any action that would call for a revision to its domestic law.
"South Korea maintains the view that the dispute settlement is important in an FTA," the official stressed. He, however, hinted that failure to get Washington to make changes did not constitute a deal breaker.
"An FTA must be viewed in the larger context and not on individual issues," he said.
South Korea and Washington began earnest talks on the FTA last year. The seventh round of talks are planned for next week in Washington. Both sides want to seal a deal by the end of March.
Seoul, Feb. 7 (Yonhap News)
S. Korea could consider adjusting auto-related taxes: minister |
