U.S.-Korea Free Trade Agreement - AbsoluteAstronomy.com

The Republic of Korea-United States Free Trade Agreement (also known as KORUS FTA) is a trade agreement between the United States

Economy of the United States

The economy of the United States is the world's largest national economy. Its nominal GDP was estimated to be nearly $14.5 trillion in 2010, approximately a quarter of nominal global GDP. The European Union has a larger collective economy, but is not a single nation...

and the Republic of Korea

Economy of South Korea

South Korea has a market economy which ranks 15th in the world by nominal GDP and 12th by purchasing power parity , identifying it as one of the G-20 major economies. It is a high-income developed country, with a developed market, and is a member of OECD...

. Negotiations were announced on February 2, 2006, and concluded on April 1, 2007. The treaty was first signed on June 30, 2007, with a renegotiated version signed in early December 2010. The agreement was passed by the United States on October 12, 2011 with the Senate passing it 83-15 and the House 278-151. It was ratified by the National Assembly of South Korea on November 22, 2011, with a vote of 151-7.

The treaty's provisions eliminate 95% of each nation's tariffs on goods within five years, and also create new protections for multinational financial services and other firms. The treaty would be the United States' first free trade agreement (FTA) with a major Asian economy and its largest trade deal since the North American Free Trade Agreement

North American Free Trade Agreement

The North American Free Trade Agreement or NAFTA is an agreement signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada – United States Free Trade Agreement...

(NAFTA) in 1993. For South Korea, this will be the second largest FTA following the one signed with the European Union, dwarfing those signed in recent years with Chile

Chile

Chile ,officially the Republic of Chile , is a country in South America occupying a long, narrow coastal strip between the Andes mountains to the east and the Pacific Ocean to the west. It borders Peru to the north, Bolivia to the northeast, Argentina to the east, and the Drake Passage in the far...

, Singapore

Singapore

Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...

, the European Free Trade Area

European Free Trade Area

At present, there are three multi-lateral free trade areas in Europe, plus the European Union which has a single market, and one former-FTA in recent history...

and the Association of Southeast Asian Nations

Association of Southeast Asian Nations

The Association of Southeast Asian Nations, commonly abbreviated ASEAN rarely ), is a geo-political and economic organization of ten countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand. Since then, membership has...

(ASEAN).

History

Although the treaty was signed on June 30, 2007, ratification of the agreement stalled when President George W. Bush's fast-track trade authority

Fast track (trade)

The Fast track negotiating authority for trade agreements is the authority of the President of the United States to negotiate agreements that the Congress can approve or disapprove but cannot amend or filibuster. Fast-track negotiating authority is granted to the president by Congress...

expired and a Democrat-controlled U.S. Congress expressed objections to the treaty related to concerns over bilateral trade in automobiles and U.S. beef exports. Nearly three years later, on June 26, 2010, President Barack Obama

Barack Obama

Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...

and President Lee Myung-bak

Lee Myung-bak

Lee Myung-bak is the President of South Korea. Prior to his presidency, he was the CEO of Hyundai Engineering and Construction and the mayor of Seoul. He is married to Kim Yoon-ok and has three daughters and one son. His older brother is Lee Sang-deuk, a South Korean politician. He attends the...

expressed renewed commitment to the treaty, stating that they would direct their governments to resolve remaining obstacles to the agreement by November 2010. After discussions at the November 2010 G-20 Seoul summit

2010 G-20 Seoul summit

The 2010 G20 Seoul Summit was the fifth meeting of the G-20 heads of government, to discuss the global financial system and the world economy, which took place in Seoul, South Korea on November 11–12, 2010...

and further intensive negotiations in early December 2010 in Maryland, Presidents Obama and Lee announced on December 4, 2010, that a deal had been reached; they subsequently signed an updated version of the agreement.

December 2010 agreement

The December 2010 deal represented a compromise between the two sides. Significant concessions were granted to the U.S. on trade in automobiles: tariff reductions for Korean automobiles were delayed for five years, and U.S. autos were granted broader access to the Korean market. At the same time, the negotiators agreed to set aside disagreements over U.S. beef exports for the time being. The deal was supported by Ford Motor Company

Ford Motor Company

Ford Motor Company is an American multinational automaker based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. In addition to the Ford and Lincoln brands, Ford also owns a small stake in Mazda in Japan and Aston Martin in the UK...

, as well as the United Auto Workers

United Auto Workers

The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, better known as the United Auto Workers , is a labor union which represents workers in the United States and Puerto Rico, and formerly in Canada. Founded as part of the Congress of Industrial...

, both of which had previously opposed the agreement. Remarking on the UAW's support, an Obama administration official was quoted as saying, "It has been a long time since a union supported a trade agreement" and thus the administration hopes for a "big, broad bipartisan vote" in the U.S. Congress in 2011. At the time of its December 2010 announcement, the White House

White House

The White House is the official residence and principal workplace of the president of the United States. Located at 1600 Pennsylvania Avenue NW in Washington, D.C., the house was designed by Irish-born James Hoban, and built between 1792 and 1800 of white-painted Aquia sandstone in the Neoclassical...

also published a collection of statements from a wide range of elected officials (Democrats and Republicans

Republican Party (United States)

The Republican Party is one of the two major contemporary political parties in the United States, along with the Democratic Party. Founded by anti-slavery expansion activists in 1854, it is often called the GOP . The party's platform generally reflects American conservatism in the U.S...

), business leaders, and advocacy groups expressing support for the KORUS FTA.

Earlier debate

Soon after being signed by the US President George W. Bush

George W. Bush

George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....

and his South Korean

President of South Korea

The President of the Republic of Korea is, according to the Constitution of the Republic of Korea, chief executive of the government, commander-in-chief of the armed forces, and the head of state of the Republic of Korea...

counterpart, Roh Moo-hyun

Roh Moo-hyun

Roh Moo-hyun GOM GCB was the 16th President of South Korea .Roh's pre-presidential political career was focused on human rights advocacy for student activists in South Korea. His electoral career later expanded to a focus on overcoming regionalism in South Korean politics, culminating in his...

, there were rumors of a possible re-negotiation of the text, citing possible opposition by the US Democrats

Democratic Party (United States)

The Democratic Party is one of two major contemporary political parties in the United States, along with the Republican Party. The party's socially liberal and progressive platform is largely considered center-left in the U.S. political spectrum. The party has the lengthiest record of continuous...

. However, Kim Jong-Hoon

Kim Jong-Hoon

Kim Jong-Hoon is a South Korean football player who since 2011 has played for South Korea second division side Gimhae City FC...

, South Korea's chief negotiator for the 10-month talks that brought the present FTA, denied such rumors assuring journalists that "The deal has been done and that's it. There will be no renegotiations." Kim's comment came after his American counterpart, Wendy Cutler, the assistant US trade representative for Japan

Japan

Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

, Korea and APEC Affairs and chief negotiator of the KORUS FTA negotiations, indicated that the Democrats may demand amendments in the labor area.

On September 16, 2008, U.S. Commerce Secretary Carlos Gutierrez

Carlos Gutierrez

Carlos Miguel Gutierrez is an American former CEO and former U.S. Cabinet Member who is currently a Vice Chairman of Citigroup's Institutional Clients Group. He has previously served as the 35th U.S. Secretary of Commerce from 2005 to 2009...

asked the US Congress to ratify the Korea-U.S. free trade treaty as soon as possible, arguing that "trade creates more jobs and boosts economic growth". He called on the U.S. Congress to swiftly approve pending trade deals with Colombia

Economy of Colombia

Colombia has a free market economy with major commercial and investment ties to the United States. Transition from a highly regulated economy has been underway for more than a decade....

and Panama

Economy of Panama

The economy of Panama is a fully dollarized free market economy with a history of low inflation. It is based mainly on the services industry, heavily weighted toward banking, commerce, and tourism...

.

The Grand National Party

Grand National Party

The Grand National Party is a conservative political party in South Korea. Its Korean name, Hannara, has a double meaning as "Great National" and "Korean National." The GNP holds a majority of seats in the 18th Assembly, lasting from 2008 to 2012....

is currently weighing pros and cons in anticipation of the National Assembly’s ratification of the Free Trade Agreement between South Korea and the United States. At a meeting of its top council held October 2 at GNP headquarters in Yeouido, GNP leadership expressed divergent opinions. Party chairman Park Hee-tae and supreme council member Chung Mong-joon sided with the argument for circumspection. Park said that it was first necessary to establish a plan for farmers and fishermen negatively affected by the signing of the South Korea-U.S. FTA, and suggested discussing the issue of passing the FTA after looking at the government’s countermeasures. But leaders within the National Assembly of South Korea are arguing for an early resolution of the matter. Floor leader Hong Joon-pyo is reported to have said that the United States could propose renegotiations in the area of automobiles, which they feel is disadvantageous to themselves, following the election, and that it is necessary to finalize approval of the FTA ratification before the U.S. election and place pressure on the United States. On October the 1st, a South Korean trade official declared that a free trade deal with the United States is unlikely to be ratified within the year given the political climate there. On October the second, it was announced that the Korean side "had completed all procedures for parliamentary ratification". The trade bill will be submitted to the National Assembly next week," Lee Hye-min, deputy minister for the FTA, told reporters. The Korean ambassador to the United States, Lee Tae-shik met with U.S. Congressmen more than 300 times to persuade them to ratify the FTA, which is facing objection from the Democrats, who had a majority in both the US House of Representatives and the US Senate.

2011

After the opposition party backtracked on their agreement to negotiate the FTA, to a more hardline stance, The ruling Grand National Party

Grand National Party

could potentially ratify the Free Trade Agreement alone in the parliament.

Former bureaucrat of the Ministry of Economy, Trade and Industry and current professor of Kyoto University

Kyoto University

, or is a national university located in Kyoto, Japan. It is the second oldest Japanese university, and formerly one of Japan's Imperial Universities.- History :...

, Dr. Nagano Takeshi (中野剛志), had negatively perceived the South Korea–United States Free Trade Agreement as a "poisonous dumpling" through his the October 24th, 2011 Diamond.jp article.

The former chief of the Public Relations in the Blue House Cheon Ho-seon (천호선) protested against the government for adding the ex-president Roh Mu-hyun as a contributor of the current FTA in a pro-government FTA advertisement.

United States reactions

There are both adherents and opponents to the FTA. Opponents argue that rice remains excluded, much to the chagrin of Korean rice exporters, and South Korea has been given ages to eliminate other agricultural tariffs such as that on US beef. In return, however, Washington hopes to get sufficient preference in this market – and to keep out rival suppliers – to sell the deal to its farming lobby.

The agreement also says little about services, a U.S. strength and its chief focus in many a bilateral negotiation. They also complain that Korea has long been accustomed to believe that it has an absolute right to sell cars, computers and ships around the world, while providing Korean high-cost farmers with levels of subsidy that make even the EU's farm payments seem mean.. During 2008, some U.S. lawmakers opposed the free trade deal with South Korea, citing an imbalance in auto trade. They also wanted more steel shipments to South Korea.

On September 28, the U.S. Chamber of Commerce's Vice President of Asia and President of the U.S.-Korea Business Council Myron Brilliant highlighted how the current automobile trade imbalance between the United States and South Korea can be leveled by the US Congress passing the pending U.S.-Korea Free Trade Agreement (KORUS), adding that "it includes strong commitments by the Korean government to address virtually every tariff and non-tariff market access barrier to U.S. automobiles in Korea raised by the U.S. auto industry during the FTA negotiations.". During the last half of 2008, U.S. officials have also expressed confidence that the trade deal will be approved once it is put to a vote during a lame duck session to be held after the Nov. 4 elections, which will help lawmakers avoid political risks during this sensitive election year.

There are Presidential elections too. Though both John McCain

John McCain

John Sidney McCain III is the senior United States Senator from Arizona. He was the Republican nominee for president in the 2008 United States election....

of the Republican Party

Republican Party (United States)

and Barack Obama

Barack Obama

of the Democratic Party

Democratic Party (United States)

have expressed commitment to the U.S.-Korea alliance, the Democratic Party reflects anxieties about globalization

Globalization

Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...

and renewed doubts about trade liberalization, which could jeopardize the Korea-U.S. Free Trade Agreement that has yet to be ratified. John McCain highlights the fact that Seoul

Seoul

Seoul , officially the Seoul Special City, is the capital and largest metropolis of South Korea. A megacity with a population of over 10 million, it is the largest city proper in the OECD developed world...

and Washington

Washington, D.C.

Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....

would benefit economically from lowering trade barriers, including a $20 billion increase in annual bilateral trade, citing the Korea-U.S. trade deal as an example of the rewards of free trade in an era of growing economic globalization. The Democratic candidate Barack Obama opposed the KORUS FTA as `badly flawed' during his campaign, claiming it wouldn't do enough to increase U.S. auto sales. His criticism echoes the auto labor unions, which are fighting to defeat a trade bill that does nothing to redress the very problems they have complained of for years. Obama has said he would vote against the FTA if it comes up for a vote in the U.S. Senate and would send it back to Korea if elected president. However, there is some hope that his threats are just election year talk. Obama had expressed similarly strong negative feelings about the North American Free Trade Agreement

North American Free Trade Agreement

between the U.S., Canada and Mexico, even going so far as to threaten to unilaterally "opt out" of the three-nation agreement during campaign stops in industrial states during February 2008. However, his senior economic advisor Austan Goolsbee

Austan Goolsbee

Austan Dean Goolsbee is an American economist, formerly serving as the Chairman of the Council of Economic Advisers and the youngest member of the cabinet of President Barack Obama. Goolsbee is from the University of Chicago where he is the Robert P...

assured Canadian officials in a private meeting on February 9 that Obama's rhetoric was "more reflective of political maneuvering than policy."."
When President Obama committed to move the Korea FTA in 2010, Democratic members of Congress and Democratic-affiliated groups strongly criticized the decision. President Richard Trumka of the AFL-CIO said: “Our negotiators should go back to the table to address the imbalanced market-access provisions in the agreement and to revisit the flawed investment, procurement, and services provisions as well. President Obama promised a ‘smart, fair and strong’ trade policy. The KORUS FTA does not meet this standard, and we will work closely with the Administration and Congress to improve this agreement on behalf of American and Korean workers. Unless and until the agreement is amended to address these concerns, we will strongly oppose passage of the U.S.-South Korea trade agreement." Meanwhile, Chairwoman Louise Slaughter (D-N.Y.) of the House Rules Committee said: “I am surprised that the Administration would try to slide this poorly written trade deal past the American public when Congress has already said that the deal is not good for our economy or workers… To try and advance the Korean FTA when so many workers are still struggling to find work would simply move our economy backward. This trade pact was written by a Republican Administration with the corporate bottom line in mind. The President has pledged to work hand in hand with Congress, but there are significant changes that must be made in order for this free trade agreement to gain broad Congressional support."

Immediately following the passage of the South Korea-United States Free Trade Agreement in October 2011, certain companies and industry groups voiced their concern for the deal. According to the United States International Trade Commission, the American textile industry is expected to lose jobs as South Korean manufacturers make the same products at 15 to 20 below the cost to American manufacturers.Citing concern over American jobs, Allen E. Gant, Jr., the president and CEO of textile manufacturer Glen Raven

Glen Raven, Inc.

Glen Raven, Inc. is a fabric manufacturing and marketing company. The company is headquartered in Glen Raven, North Carolina and headed by Allen Erwin Gant, Jr., the grandson of John Quinton Gant and founder of the industry advocacy group National Council of Textile Organizations...

, said “We are very much in favor of global trade, but we’re just not about having agreements that are unfair to the U.S. textile industry.[...]The U.S. needs every single job that we can get.” Others in the American textile industry, which has experienced a sustained decline for decades, stated that there was a lack of commitment by the U.S. government to preserve American textile manufacturing.

South Korea reactions

The opinion of Koreans towards the FTA is divided, at least by sector. The Korea Institute for International Economic Policy

Korea Institute for International Economic Policy

The Korea Institute for International Economic Policy is a think tank under the affiliation of the South Korean government. It is a public entity and has more than 160 employees in 2011, among them more than 50 research fellows with PhD's. KIEP is headquartered in Seocho-gu, Seoul but also...

estimates that exports to the United States will rise by 12% per year, or $5.4 billion, and grow by 15% in the longer run. However, the Korea Rural Economic Institute predicts that US agricultural exports to South Korea, currently $2.8 billion, could double after the FTA, causing the loss of up to 130,000 jobs. Proponents of the FTA cite that it will create more jobs than the ones destroyed, and will be, on the long term, beneficial for the country. Business groups welcomed the news that South Korea concluded the free trade agreement with the U.S. Business leaders stressed the importance of smoothly implementing the next steps, including ratifying the agreement in the National Assembly of South Korea

National Assembly of South Korea

The National Assembly of the Republic of Korea is a 299-member unicameral legislature. The latest general elections were held on April 9, 2008. Single-member constituencies comprise 245 of the National Assembly's seats, while the remaining 54 are allocated by proportional representation...

.

Lee Hee-beom, the chairman of the Korea International Trade Association

Korea International Trade Association

The Korea International Trade Association is a private non-profit organization founded in 1946 with 105 traders as its founding members...

(KITA) declared that "This is our country's first step in its endeavor to join the group of advanced economies," adding that "the government should work out measures to compensate those who might suffer from the market opening and continue the restructuring process. The National Assembly should ratify the FTA as soon as possible so that the negotiations will show results quickly." Similar statements were made by the Federation of Korean Industries: "with the successful conclusion of the FTA talks with the U.S. as momentum, this agreement will upgrade the traditional alliance with the U.S. to a higher level, and greatly help our enterprises advance into the US". The Korea Chamber of Commerce and Industry said, "we should view the FTA from the broad standpoint of promoting national interests rather than the interests of specific industries or groups".

Citizens' groups worried about transparency, the environment and labor standards say the deal was deficient as it was agreed on behind closed doors. The South Korean government, for example, has not allowed open, public debate about the FTA's impact on the nation's economy and sovereignty. The Korean Advertising Broadcasting Agency blocked the running of an advertisement produced by farmers protesting the deal. "Should the FTA become law after an undemocratic process and in spite of mass popular opposition, the FTA will drive the perception in South Korea that America's democratic rhetoric is merely a cover for profit-seeking behavior," Korean Americans for Fair Trade said in a statement.

There have been several massive protests against the FTA in the country. A nation-wide protest on November 22, 2006 was reported to have drawn 65,000 to 80,000 people, with 9,000 to 20,000 of them gathering at the city hall in Seoul. A protester named Heo Se-uk

Heo Se-uk

Heo Se-uk was a 54 year old South Korean labor union member and taxi driver who set himself ablaze on April 1, 2007 in Seoul to protest the U.S.-Korea Free Trade Agreement. He lived for two weeks after the incident, despite serious burns on 63% of his body. He finally succumbed to a septic...

set himself on fire Sunday shouting "Stop the Korea-U.S. FTA" outside the hotel where negotiators were meeting. He was being treated for third-degree burns, police said. The overall opinion of the population has fluctuated over time and is difficult to gauge. One poll in April 2007 indicated support for the Free Trade Agreement at 58.5%. Other polls indicated a majority opposed to the agreement, including an 83% no confidence rating in the government's ability to negotiate the agreement. The Lee Myung-bak

Lee Myung-bak

administration has taken considerable political heat for its part in advancing the FTA, as did the previous Roh Moo-hyun

Roh Moo-hyun

administration. President Lee had to endure months of protests over the decision to reopen American beef imports, a decision that was made primarily with an eye towards securing American support for the FTA.

Effects

According to the U.S. International Trade Commission (ITC), KORUS would add a minimum of $9.7 billion to U.S. exports and boost U.S. GDP by at least $10.1 billion. The U.S. think-tank Economic Policy Institute
Economic Policy Institute
The Economic Policy Institute is a 501 non-profit, liberal, nonpartisan think tank that seeks to broaden the public debate about strategies to achieve a prosperous and fair economy...

predicts that it will lead the loss of 159,000 jobs. The U.S. Chamber of Commerce, a business lobbying group in favor of the Korea FTA, predicts that the Korea FTA will create U.S. jobs.
U.S. financial services firms such as Citigroup
Citigroup
Citigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City, New York, United States. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial conglomerate...

have pushed for the Korea FTA. Citigroup’s Laura Lane, corporate co-chair of the U.S.-Korea FTA Business Coalition, stated that “it is the best financial services chapter negotiated in a free trade agreement to date.” In March 2006, prior to the formal U.S.-Korea negotiations, the Coalition of Service Industries (CSI) stated that one of its primary objectives in the negotiation related to data processing services:

“Korean laws make it difficult for foreign companies to outsource and offshore activities. These laws often relate to privacy (private data protection law and real name law). Under the Protection and Use of Credit Information Law and its Presidential Decree, foreign companies operating in Korea are prohibited from transferring any customer data whatsoever out of Korea, even for the purposes of processing data to their own affiliates. In addition, as a result of the revision of the Insurance Business Act in May 2003, it is mandatory for insurance companies to maintain in-house the basic human and non-human resources, including IT systems, necessary for insurance business. These restrictions seriously undermine the government’s goal of making Korea into a financial ‘hub’ by significantly increasing the cost of operating in Korea. These regulations should be modified to permit companies to follow their global operating models for outsourcing and offshoring provided they have existing practices to protect consumer information.”

Much attention has been focused on automobiles, hitherto a major US grievance and a large component of the bilateral trade deficit: during 2006, only about 4,000 US-manufactured cars (excluding GM's Daewoo subsidiary) were sold in South Korea while sales of cars manufactured by South Korean companies (including cars manufactured in Korean-owned US plants) in the United States exceeded 800,000. South Korean automakers sold 730,863 vehicles in the United States in 2005, while American auto companies sold only 5,795 in South Korea, according to Commerce Department figures.
The FTA will abolish taxes in South Korea "on large cars produced in the United States, which US auto makers have long called an impediment to market access in Korea".
The agreement requires Korea to reduce "car taxes that are based on engine displacement that allegedly disadvantage U.S.-made cars, which tend to be larger than domestically-produced Korean cars".
The Obama administration has opposed these engine displacement taxes even while vowing to support domestic limits on greenhouse gas emissions.
The 775,000 vehicles Korea sold in the U.S. in 2007 include 250,000 that were made at the Hyundai plant in Alabama. When Hyundai brings its Kia factory in Georgia on line, it will increase Korea's total production capacity in the U.S. to 600,000 units per year. If GM Daewoo vehicles are included in US companies' sales in Korea, their market share there rises to 12.8%, versus a US market share of 5% for Korean manufacturers.
Rice
Rice
Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...

is excluded, at Seoul's insistence. In return, South Korea will reduce its 40% tariff on US beef over 15 years.
Market opening already underway in law and accounting will widen, but major service sectors such as education and healthcare were excluded. Labour productivity in the South Korean service sector is just 56% of that in manufacturing, far below OECD's average of 93%.
Seoul wanted products made by South Korean companies in the Kaesong Industrial Region
Kaesong Industrial Region
Kaesŏng Industrial Region is a special administrative industrial region of North Korea. It was formed in 2002 from part of Kaesŏng Directly Governed City.-Kaesŏng Industrial Park:...

in North Korea
North Korea
The Democratic People’s Republic of Korea , , is a country in East Asia, occupying the northern half of the Korean Peninsula. Its capital and largest city is Pyongyang. The Korean Demilitarized Zone serves as the buffer zone between North Korea and South Korea...

included in the deal; Washington did not. The disagreement is unresolved but was not allowed to scupper the deal, which allows for further talks on the subject.
Agriculture in South Korea is expected to be adversely affected, and $119 billion in aid to South Korean farmers has been announced over the next ten years to offset the effects of the finalized agreement.
The free trade agreement is expected to increase the growth rate of the South Korean GDP by 0.6% per year for the next 10 years. The South Korean government also cite increased foreign direct investment
Foreign direct investment
Foreign direct investment or foreign investment refers to the net inflows of investment to acquire a lasting management interest in an enterprise operating in an economy other than that of the investor.. It is the sum of equity capital,other long-term capital, and short-term capital as shown in...

in Korea and heightened competition.
More than $1 billion worth of US farm exports to South Korea will become duty-free immediately. Most remaining tariffs and quotas
Import quota
An import quota is a type of protectionist trade restriction that sets a physical limit on the quantity of a good that can be imported into a country in a given period of time....

will be phased out over the first 10 years the agreement is in force. KORUS FTA would remove tariffs on 95% of consumer and industrial products between the countries within three years. South Korean industrial tariffs average 6.5% – and many are 8% – making market access a very important issue for US industries.
The trade accord, if ratified, will knock down tariff and non-tariff barriers between the world's largest and 11th-largest economies, which did US$74 billion in two-way trade in 2006.
The agreement does require both countries to enforce their own labor and environmental laws, and ensures access to legal mechanisms to ensure enforcement.
South Korean public companies receive opportunities for privatization.

External links

United States – Korea FTA Full Legal Text
Summary of the KORUS FTA
Korea Will be Largest FTA Partner in 15 Years
Video on South Korea-US Economic Relations from the Dean Peter Krogh Foreign Affairs Digital Archives
KORUS FTA: Opportunities for Agriculture
Launch of U.S.-Korea Free Trade Agreement – Office of the U.S. Trade Representative, February 2, 2006
Workers hold protests against U.S.-South Korea free-trade talks – International Herald Tribune, November 22, 2006
United States, South Korea Conclude Free-Trade Agreement, USINFO, April 2, 2007
United States and Korea Conclude Historic Trade Agreement, Office of the U.S. Trade Representative, April 2, 2007
The Administration's Focus on Promoting Free Trade and Enhancing U.S. Trade and Export Opportunities US Department of State, September 26, 2008
US readies for Korean business Asia Times Online
Korean Americans for Fair Trade Official Website

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