Gov't to Bail Out Car Industry Indirectly (Korea)

english.chosun.com ^ | Dec.23,2008 | Arirang News

[do the dhue]

Korea's car industry, one of the main growth engines of the economy, has been hit hard by the global economic slowdown. In the second half of this year domestic auto sales plunged to levels that haven't been seen since the Asian financial crisis of the late 1990s due to deteriorating consumer confidence. In November sales dropped by almost 30 percent compared to the same period last year.

And just this past week Korea's fourth largest automaker, Ssangyong Motor, announced that it will not be able to pay staff this month because it lost over W100 billion (US$1=W1,313) this year alone.

But the government cannot openly support the industry as the World Trade Organization prohibits a government directly bailing out a specific industry, citing that it could negatively impact the same industry in other WTO member states

Excerpt

[do the dhue]

World Trade Organization prohibits a government directly bailing out a specific industry, citing that it could negatively impact the same industry in other WTO member states

Why wouldn't this affect GM and Chrysler?

[xzins]

I think it’s because the US government is offering GM/Chry loans that must be repaid rather than a direct infusion of cash to make up the losses.

It does puzzle me over the bank bailouts, though. No one’s saying that they have to repay anything. Maybe banks don’t fall under the WTO.

[do the dhue]

OK

that makes some sense.

In regards to the banks, I think it is because the marginal loans that were made, were government backed loans.

[do the dhue]

And I think the guvment bought preferred stock in the banks too.

[xzins]

that makes some sense

:>)

Governments rarely do. And our gov't is out of control.

[do the dhue]

And our gov't is out of control.

You have that right. And I can't image what kind of tail spin we will be in four years from now.