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President Barack Obama criticized Congress at a Wednesday press conference for not passing legislation that would help the economy. One example, he said, was that Congress needs to approve pending trade agreements.
"I think these trade deals will be important because right now South Korea, frankly, has a better deal when it comes to our trading relationship than we do. Part of the reason I want to pass this trade deal is you see a whole bunch of Korean cars here in the United States, and you don't see any American cars in Korea. So let's re-balance that trading relationship. That's why we should get this passed," he said.
We decided to fact-check Obama's statement about cars in the United States and Korea.
Our first stop was to look at the statistics on auto imports and exports. We turned to numbers compiled by the U.S. Commerce Department. The numbers show that the United States exported 16,659 vehicles to Korea in 2010. Korea, meanwhile, exported 515,646 vehicles to the United States. That means that for every car we sent to Korea, the Koreans sent more than 30 to us. And we should note the 16,659 represented a six-year high; between 2005 and 2010 the number was even lower.
It's true that South Korea has a smaller population than the United States, with about 48.8 million people there and 313.2 million people here. But that is an imbalance of about 1 to 6, significantly smaller than the disparity in auto sales.
So Obama's larger point about a significant trade imbalance for cars is correct. Experts we spoke with also said he was largely correct that South Korea has "a better deal" when it comes to our trading relationship.
Still, Obama's statement requires a few qualifications, they said.
For one thing, there are not clear categories of American cars and Korean cars. Kia Motors, for example, has a large auto plant in Georgia, and Hyundai Motors has a plant in Alabama. It's possible that some of the cars the United States sold to Korea could be Korean-branded cars.
Meanwhile, General Motors owns the Korean auto company Daewoo, which it purchased back in 2001. One estimate we saw said GM sold 90,000 Korean-made cars in Korea in 2008. This year, GM decided to end the Daewoo brand and operate as GM Korea. The Korean-made cars it now sells in the country carry typical American brands like Chevrolet.
Additionally, the experts we spoke with presented a more nuanced picture of whether the trade agreement would actually help U.S. automakers sell more cars in Korea. Koreans tend to favor smaller, more fuel-efficient cars, and the government there maintains strict standards for fuel efficiency and other things that make it hard for American companies to compete, even if tariffs between the two countries are reduced.
To look at it more optimistically, though, they said the proposed trade agreement would not make things worse for U.S. automakers.
"I don't think we can get any worse," said Sean McAlinden, chief economist for the independent Center for Automotive Research. "The Koreans are doing all the damage they can do right now."
Finally, we wanted to address the point of whether American made cars are rarely seen in Korea. David Straub, who leads the Korean Studies Program at Stanford University, lived in Seoul in 2007, so we asked him if he ever saw an American branded car while he was there. He said the statistics show that there are indeed some American cars are in South Korea. "But did I ever see an American car? I don't recall seeing one," he said.
It's worth noting that Obama's press conference didn't do much to prod Congress to act on the trade agreement. The day after his remarks, Senate Republicans boycotted a hearing on the trade agreement, arguing that the trade agreement should not include $1 billion in additional spending to help workers who become unemployed as a result of international trade.
Overall, though, we found little dispute that Obama's statement, "You see a whole bunch of Korean cars here in the United States, and you don't see any American cars in Korea," is largely correct, if you account for the complexity of international trade. Korean companies are building cars in America, while American companies build cars in Korea. We rate his statement Mostly True.
Interview with Sean McAlinden of the Center for Automotive Research, June 30, 2011
Interview with David Straub, Associate Director of Korean Studies Program, Stanford University, June 30, 2011
U.S. Department of Commerce, U.S. Motor Vehicle Industry Domestic and International Trade Quick-Facts, 2005 - 2010
E-mail interview with Jeff Schott of the Peterson Institute for International Economics, June 30, 2011
E-mail interview with Bryan Riley, senior policy analyst in trade policy, the Heritage Foundation, June 30, 2011
The Peterson Institute for International Economics, FTAs and the Future of US-Korean Trade Relations, November 2009
U.S. Department of Commerce, International Trade Administration, The U.S.-Korea Trade Agreement:Opportunities for the U.S. Automotive Sector, April 2011
The Wall Street Journal, U.S. Sets Sweeping New Deal on Trade, Dec. 3, 2010
Bloomberg Businessweek, Korea's Kia Opens Auto Plant in U.S., Nov. 17, 2009
The Birmingham News, Kia production in Georgia helping companies across Alabama, June 19, 2011
Bloomberg, GM to Start Selling Cars Under Chevrolet in South Korea, Drop Daewoo Brand, 2011
The Washington Post, Senate Finance Committee postpones action on free-trade deals after GOP boycott, June 30, 2011
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