U.S. outlines benefits of landmark trade deal with South Korea
After eight formal rounds of negotiations, starting in June 2006, the Bush administration completed a comprehensive free trade deal with South Korea late Sunday.
In a letter to the heads of the U.S. House and Senate, President Bush highlighted the benefits of the U.S.-Korea Free Trade Agreement in terms of U.S. export promotion and related job growth. It’s considered to be the most significant U.S. free trade agreement since the 1993 North American Free Trade Agreement.
South Korea is the world’s 10th-largest economy. Two-way goods trade between the United States and South Korea in 2006 was valued at $72 billion.
“When implemented, the KORUS FTA will expand trade and investment flows between the two countries across a comprehensive list of sectors,” said the Office of the U.S. Trade Representative in a statement.
In specific, the trade deal will create new export opportunities for U.S. farmers by either eliminating or phasing out tariffs and quotas on a broad range of products. More than $1 billion worth in U.S. agricultural exports will immediately become duty free once the trade deal takes effect. Most remaining tariffs and quotas will be phased out over the first 10 years that the agreement is in force.
About 95 percent of bilateral trade in consumer and industrial goods becomes duty-free within three years of the agreement entering into force, with the remaining tariffs to be eliminated within 10 years.
The trade deal will eliminate discrimination in engine “displacement-based taxes,” long considered a significant impediment to U.S. automakers in Korea. The USTR pointed out that the agreement contains commitments to address specific standards-related concerns raised by U.S. automakers, and creates a working group to review future auto-related regulations in South Korea. The agreement also sets up enhanced dispute settlement procedures for automakers to help maintain consistency with the agreement.
“With the inclusion of the ‘yarn forward’ rule of origin, the KORUS FTA will give apparel products from Korea preferential access to the U.S. market while supporting U.S. fabric and yarn exports and jobs,” the USTR said. “Textile and apparel makers in both countries will benefit from a special textile safeguard and strong customs enforcement requirements.”
The trade agreement also contains enhanced investor protections, improved service sector market access, intellectual property rights protections, labor rights and environmental protections.
“This FTA will strengthen the more than 50-year-old alliance between the United States and Korea, and will underscore the substantial U.S. engagement in and commitment to East Asia,” the USTR said. “The KORUS FTA will also help cement important political and economic reforms that Korea has undertaken in the past decade and help promote strong economic relations with the region.”
The Bush administration scrambled to conclude the U.S.-South Korea free trade agreement. By law, President Bush must notify Congress that he’s signed a free trade agreement 90 days before his special Trade Promotion Authority status expires on July 1. The president’s letter was released to Congress at about midnight on Monday, according to the Associated Press.
Under the Trade Promotion Authority, Congress may either vote to approve or oppose a free trade agreement negotiated by the White House, but not modify it.