CRS Reports on Implications of Stalled U.S.-Korea FTA for Manufacturers, Etc.
The Congressional Research Service has issued a report to Congress entitled “Pending U.S. and EU Free Trade Agreements with South Korea: Possible Implications for Automobile and Other Manufacturing Industries.” 1
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EU and Korea Signed Free Trade Agreement, U.S.-Korea FTA Still Pending
At the time of CRS’ report, the European Union had not yet signed an FTA with South Korea. However, the EU and South Korea signed the FTA (KOREU FTA) on October 6, 2010. The date of provisional application will be July 1, 2011, pending formal consent by the European Parliament, ratification of the agreement by Member States, etc. (See ITT’s Online Archives or 10/06/10 news, 10100621, for BP summary.)
The U.S.-South Korea FTA (KORUS FTA) has not yet been approved by Congress.
U.S. Manufacturers Could Lose South Korean Market to EU Competitors
CRS states that Congressional interest in an FTA between the European Union and South Korea mostly centers on those U.S. industries competing with European industrial sectors, especially motor vehicles. The FTAs raise questions about what it could mean for U.S. manufacturers if the U.S. takes longer, or fails altogether, to implement the KORUS FTA.
The possibility exists that the removal of tariff and nontariff barriers between the European Union and South Korean markets could result in U.S. manufacturers losing South Korean market share to European competitors.
Manufacturers Support FTAs, Labor Unions Skeptical of Benefits
CRS reported that most U.S. and European manufacturing sectors, with some auto manufacturers in particular among notable dissenters, argued that the FTAs will be beneficial and are largely supportive.
On the other side, labor unions in the U.S. and the European Union are considerably more skeptical, claiming that South Korean companies could be the biggest beneficiaries, since they could gain even greater access to the significantly larger U.S. and EU markets. Labor union leaders say the FTA will result in further job losses as their respective manufacturing workforces compete for market share with competitive South Korean manufacturers in their own domestic markets.
1At the time that CRS issued this report (September 1, 2010), the FTA between the EU and South Korea was still pending.
(See ITT’s Online Archives or 10/07/10 news, 10100726, for BP summary of the National Association of Manufacturers urging the Administration to move faster on the U.S. FTA with Korea, pursuant to the signature of the KOREU FTA.)
(Report dated 09/01/10)