Seeing free trade through new lenses “The UAW is pleased”

Seeing free trade through new lenses
Automotive News | October 18, 2011 – 12:15 pm EST

The word the UAW chose to describe its reaction to the recent passage of a free-trade agreement between the United States and South Korea last week was “pleased.”

“The UAW is pleased with congressional approval of the U.S.-South Korea Free Trade Agreement,” it said in an official statement.

It’s a striking change of tone for the union, which has historically decried the concept of free-trade agreements, even with Canada, as a sure ticket to lost American jobs. But it is worth arguing that the union’s hearty acceptance of free trade with Korea says less about the UAW and more about the current outlook for U.S. manufacturing.

The United States has become a more competitive source of auto manufacturing than it was in 2007 when the Bush administration negotiated the agreement and the union denounced it.

A lot of market conditions have changed since then. The dollar is weak. Labor rates are lower. Capacity is available. And who would dispute that products are improved? They are better styled, more technically advanced, offer better fuel economy and are more “non-U.S.A.-centric.” That is, there is now a better selection of vehicles you might realistically picture on the roads of France or Germany — or Korea — than ranch-sized pickups and SUVs the size of boats.

Does this spell easy access into South Korea’s markets? Not at all. Korean consumers are stridently partial to Korean products. American-made vehicles accounted for just 1 percent of auto sales in Korea last year. By comparison, the Kia brand by itself has a nearly 4 percent share of the U.S. market.

To be blunt, it will still be a fight to sell American vehicles there. But the UAW believes it’s worth a shot to “provide UAW members with the opportunity to make products for export to Asia,” in the words of UAW President Bob King.

However, the key factor will be whether American attitudes toward exports have changed. In the past — both the long-ago past and the recent past — U.S. manufacturers tended to view exports as a pain in the neck. Homologate a car, transport it thousands of miles on a ship and advertise it in a language that U.S. sales execs can’t speak? Who would waste the time?

The volume levels at home have been too big for U.S. factories to worry about chasing consumers in Japan, Korea or even Europe. Until now, anyway. Unless that mind-set has changed, a free-trade agreement will amount to little more than King’s other choice word: an “opportunity.”

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