Experts say that when the Korea-U.S. free trade agreement takes effect, import tariffs on second-hand cars could also be removed and a wave of used cars could flood Korea's auto market.

According to industry sources and the Ministry of Commerce, Industry and Energy on Tuesday, the FTA measures that will abolish the eight percent import duties on American cars will also apply to used cars. As a result, low-priced used Japanese, American and German cars made and sold in America may flow into Korea.

Some are worried that gray-market importers will bring in used cars that are as good as new. The impact may affect how official importers sell their new cars. An official from a car import and transport agency said, "If the eight percent import duty is abolished, then we'll save about W4 million (US$1=934) importing a W50 million foreign car. That's more than the W2.5 million it costs to ship a car from the western U.S. to Korea." Since used cars in America are 30 percent cheaper than similar domestic used cars, when the import duties are abolished, imports of U.S. used cars are expected to jump.

But some argue that even if the import duties are abolished, consumers won't see much savings. They will still have to pay taxes totaling about 20 percent, including a special excise tax, education tax, and value added tax. And it costs an additional W4 million to register a vehicle and pay emissions and noise inspection fees.

According to the Ministry of Construction and Transportation, 49,276 imported cars were registered last year, and according to the Korea Automobile Importers & Distributors Association, 40,530 imported cars were registered by official importing companies last year. An official with the ministry said the difference of 8,746 cars would seem to be the number of second-hand imports. "The number of used cars imported by unofficial companies is increasing rapidly each year and this year we predict the number will surpass 10,000," the official said.

The size of the domestic new car market is about 1.2 million vehicles, while the used car market is about 1.5 million vehicles. In America, the used car market alone is 40 million vehicles. "If used cars are imported from America in great numbers, we may not be able to sort out the dangerous ones or the dirty ones. That may cause safety and pollution problems," said an official with the Korea Automobile Manufacturers Association.

(englishnews@chosun.com )