As you’ve heard on NPR over the last couple of days, the United States and South Korea this week agreed on a new trade deal. It’s a revised version of the U.S. Korea Free Trade Agreement. But despite that arrangement, a major American company may be pulling out of the country. HPR’s Bill Dorman has more in today’s Asia Minute.
General Motors wants more tax breaks from the South Korean government.
That’s the latest word in an ongoing saga about whether the company will be able to maintain its Korean subsidiary—which manufactures vehicles in South Korea.
But the automaker is looking for more than government action.
This week, GM executives told union workers at GM Korea that they need to agree on a deal that will cut their benefits, and workers face a deadline of April 20th. GM Executive Vice President Barry Engle says without an agreement with the union, GM Korea will have no choice but to file for bankruptcy.
The company is soon facing several major debt re-payments.
GM Korea employs nearly 16,000 people in the country. The company came out of the former Daewoo Motors, and has a somewhat complicated ownership structure.
Right now, General Motors owns most of the company, the state-run Korean Development Bank owns nearly 20-percent, and 6-percent is owned by the Chinese automaker SAIC Motor.
GM has been negotiating with the government of South Korea for months—and has dangled the possibility of a multi-billion dollar investment if terms can be reached.
South Korea’s government says GM has still not provided enough detailed financial information to fully justify the tax breaks.