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Imported pickup tax in play in Trump trade talks with South Korea

WASHINGTON/SEOUL - Talks starting Friday to amend a U.S.-South Korean trade deal must balance President Donald Trump's domestic agenda against the need to contain a nuclear armed North Korea and will have to be completed swiftly, officials from both sides told Reuters. The U.S goods trade deficit with South Korea has doubled since the 2012 signing of the US-Korea Free Trade Agreement (KORUS). Almost 90 percent of the 2016 shortfall of $27.6 billion came from the auto sector, an issue the United States is expected to press hard in the Washington talks. A quick deal could give Trump his first trade victory at a time when NAFTA negotiations are dragging on without agreement and pressure on China to change trade practices has yielded little progress. The talks, led by Assistant U.S. Trade Representative Michael Beeman and Yoo Myung-hee, director general for FTA negotiations at South Korea's trade ministry, begin at a time of heightened tensions with Pyongyang. A trade ministry official in Seoul said South Korea was waiting for Washington's formal proposals and substantial negotiations would not take place on Friday over a deal Trump has repeatedly threatened to scrap. "The U.S. brought up lowering non-tariff barriers, especially for their auto industry. At the moment, we are not sure whether the U.S. will ask that but we will be prepared (for the U.S. demand)," said the official, who spoke on condition of anonymity as he was not authorized to talk to the press. A top priority for the Americans is maintaining a 25 percent tariff on Korean pickup truck imports, which was meant to have been phased out from 2019 under the current deal, according to a U.S. official and a South Korean car industry source. South Korea has two major automakers, Hyundai and Kia, both of which are heavily reliant on exports due to the small size of their domestic market. Critics charge that South Korea discriminates against imports with a range of non-tariff barriers. South Korean auto companies believe that Washington will also seek to increase the 25,000-vehicle per U.S. automaker threshold for U.S. car shipments to South Korea that can enter the country without meeting Seoul's domestic industry regulations. The official at a South Korea auto company, who was not authorized to speak to the media, also said the United States was interested in easing Seoul's vehicle emissions targets. These are viewed as discriminating against U.S. autos.

US Congress lets $8,000 hydrogen vehicle tax credit expire

When Toyota introduced the 2016 Mirai last month in preparation for a launch late next year, it said that the hydrogen car will have a $57,500 MSRP and that there will be a federal tax credit available worth up to $8,000. The problem, as we noted at the time, is that that federal credit was set to expire at the end of 2014. The technical language of the current rule says that someone who buys a fuel cell vehicle, "may claim a credit for the certified amount for a fuel cell vehicle if it is placed in service by the taxpayer after Dec. 31, 2005, and is purchased on or before Dec. 31, 2014." With the 113th Congress now finished up for the year and legislators headed home for the holidays, we know one thing for certain: the federal tax credit for hydrogen vehicles was not updated and will end as we're all singing Auld Lang Syne next week. All of this isn't to say that Mirai buyers won't be able to take $8,000 off the price of the car 12 months from now. For proof of that, we only need to look at other alternative fuel tax incentives and realize that this Congress simply isn't moving fast enough to deal with things that are expiring right now. One of the last things that the 113th Congress did in December was to take up the tax credits that expired at the end of 2013 and renew some of them. Jay Friedland, Plug In America's senior policy advisor, told AutoblogGreen that PIA and other likeminded organizations worked with Congress to extended the electronic vehicle charging station (technically: EVSE) tax credit that was part of the Alternative Refueling Tax Credit in IRS Section 30(C) through the end of 2014. "Individuals can deduct 30 percent of the cost of purchasing and installing an EVSE up to $1,000; businesses, 30 percent up to $30,000," he said. "This tax credit is applied to any system placed into service by 12/31/14 and is retroactive to the beginning of the year. So go out and buy your favorite EV driver an EVSE for the holidays," he said. An electric motorcycle credit was killed at the last minute as Congress was getting ready to leave, but H.R. 5771 did extend the Alternative Fuels Excise Tax Credits for liquefied hydrogen and other alternative fuels. These sorts of tax credit battles happen all year long. In July, Blumenthal introduced the Fuel Cell and Hydrogen Infrastructure Act of 2014, which never got out of the Finance Committee. Back to the hydrogen vehicle situation.

Hyundai sales slump in China over North Korea, standoff with Chinese partner

BEIJING/SEOUL — Hyundai is at loggerheads with its Chinese partner over efforts to cut supplier costs, as they grapple with cutthroat competition and the impact of a standoff between Beijing and Seoul. Hyundai, along with affiliate Kia, has been caught up in a political row over a missile defense system that is being deployed in South Korea, but opposed by China, as tensions grow over North Korean missile tests and last week's test of a nuclear bomb the North claims can be mounted on a missile. Sales of Hyundai cars in China have been falling, part of a backlash against South Korean brands over the missile system that China views as a threat to its own national security. On Tuesday, South Korea asked the United States to lift a limit on the explosive payloads it can use in the missile system. This as a North Korean missile, believed to be an intercontinental ballistic missile, was being tracked by intelligence services being moved on the ground toward North Korea's west coast and a possible launch site. That has come against the backdrop of ever tougher competition from local Chinese automakers. Until last year, Hyundai and Kia ranked third in China by sales. But Hyundai's sales alone have slumped 41 percent from January to July, fraying relations with local partner BAIC Motor Corp and making this the biggest crisis since Hyundai entered the Chinese market in 2002. Last month, Hyundai suspended production at its four China plants for a week after a French supplier refused to provide fuel tanks when its bills went unpaid. On Tuesday, Hyundai suspended production at one of its plants in China after a German firm went unpaid. Hyundai and BAIC — whose Beijing Hyundai joint venture is a 50:50 partnership — are divided over how to solve the issue of suppliers and tougher competition. Hyundai wants to protect its South Korean supply chain, while BAIC favors shifting to cheaper Chinese suppliers to cut costs, the people said. "BAIC wants to solve this aggressively and is ... asking Hyundai to change its sourcing strategy significantly and immediately," said the head of a Hyundai supplier based in Seoul, adding the idea was to source more locally from cheaper suppliers in China. Hyundai wants to solve this more gradually "over perhaps 5-10 years and do so in phases," the person said. BAIC declined to comment.