US PREPARES BATTLE PLAN FOR SHARE OF KOREAN CAR TRADE

US PREPARES BATTLE PLAN FOR SHARE OF KOREAN CAR TRADE

The United States is preparing for another trade skirmish over automobiles - with South Korea, not Japan - and it expects support from its European trading partners this time around.

Talks so far with Seoul have produced few results in unlocking South Korea's car market to imports, U.S. officials said, adding that they were unsure whether progress could be made by the end of this month, when U.S. Trade Representative Mickey Kantor has to decide whether to initiate action against South Korea.U.S. and Korean trade negotiators have met more than a dozen times since mid-1994 to try to resolve the trade dispute, and another round of talks is expected to be held in the middle of this month, officials said.

"We would much prefer an agreement to having to keep knocking on the door," said Marie Kissel, senior analyst with the American Automobile Manufacturers Association. "The Koreans have not moved for over a year, and they need to be doing more. We think it's time to review what the options are."

The association, which represents the Big Three American car manufacturers, asked Mr. Kantor to put Korea on a priority list for action that could lead to U.S. sanctions if no progress is made on opening its market to foreign car imports.

Mr. Kantor has until Sept. 27 to decide. That is when he will report to Congress on what trade actions he plans for the coming year.

It was this same process that started the ball rolling last year on the U.S. fight with Japan over car trade. The two sides reached agreement in late June after Washington moved to slap high duties on Japanese luxury car imports.

Mr. Kantor could step toward sanctions or take a complaint to the World Trade Organization in Geneva, which probably would gain more support from U.S. trading partners and produce less backlash in Korea, trade analysts said.

The issues this time are different than they were with Japan. But U.S. officials say the end result is the same - a sanctuary market that keeps out foreign competitors while Korean companies aggressively move into other countries.

One other difference, U.S. officials said, is that Washington is likely to enjoy more support in its trade dispute with South Korea from Europeans, who strongly criticized the United States in its fight over cars with Tokyo.

Even Japan, which is virtually frozen out of the Korean car market, will likely support the United States in a WTO complaint, officials said.

"Canada has already expressed an interest if we were to go that route. And I am sure the Europeans and the Japanese will both want a seat at the table if we were to go the WTO route," one U.S. official said.

"I think that you will find that Europeans are very concerned about market access to Korea as well," another said.

South Korea has one of the fastest-growing car markets in the world and the smallest penetration of imports, the officials said.

The U.S. complaint against South Korea appears more clear-cut than it did with Japan, where U.S. officials charged that a tangled web of regulation and cozy business relationships shut out foreign competitors.

In South Korea, a government-generated bias against imports and a complex set of taxes that can push the price of an imported car up by as much as 110 percent work against foreign competitors, U.S. officials said.