SEOUL, April 5 (Yonhap) -- Japanese and European cars made in the U.S. are unlikely to benefit fr... Japanese, European cars un

SEOUL, April 5 (Yonhap) -- Japanese and European cars made in the U.S. are unlikely to benefit from a free trade pact between Seoul and Washington, Commerce and Industry Minister Kim Young-ju said Thursday.

In a news briefing, the official said that high consumer demand and inability to meet local minimum parts requirements will make it hard for Japanese and European carmakers to use the U.S. as a stepping-stone to enter the South Korean market.

In the 10-month-long negotiations concluded on Monday, Seoul agreed to immediately scrap its 8 percent tariff levied on all U.S.-made cars. Washington said it would discontinue duties of 2.5 percent for South Korean-made cars with engine capacities of less than 3,000cc once the free trade agreement (FTA) goes into effect, and lower tariffs each year for three years on cars with engine capacities exceeding 3,000cc.

"For Japanese carmakers, U.S. demand is strong enough so there is no reason for them to ship their locally-made vehicles to South Korea," the minister said. He said such a move would incur additional shipping and insurance outlays.

The official said that Japanese carmakers like Honda and Toyota usually produce Accord and Camry models in their U.S. plants, while South Koreans prefer Lexus and CR-V models.

In addition, Kim said that most European car manufacturers do not use enough U.S. parts to classify their products as American-made. Under the FTA, U.S. parts must account for at least 50 percent of the finished product.

The policymaker then said that while South Korea was unable to get the U.S. to scrap all of its auto-related tariffs at once, the FTA could be very helpful in expanding its market share. South Korea sold US$8.7 billion worth of autos in the U.S. last year.

"About 69 percent of all cars sold in the U.S. last year had a engine capacity of less than 3,000cc, while many cars over this, like the Grandeur TG, are already being made America so they never were affected by duties," he said.

"In five years, the tariffs that the U.S. will levy against South Korean-made pickups will be lowered to 12.5 percent, while it would impose 25 percent for other imports," Kim said, pointing out the advantage.

The minister also said that South Koreans should look upon the FTA as a development that will enhance open competition, technological exchange and business investment with the world's largest economy.

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