U.S. and South Korea Resolve Remaining KORUS FTA Issues

The President stated that the KORUS FTA is expected to increase annual exports of American goods by up to $11 billion and support at least 70,000 American jobs.

He stated that American manufacturers of cars and trucks would gain more access to the Korean market and a level playing field to take advantage of that access. The agreement would increase exports of agricultural products and open Korea’s services market to American companies.

Obama also noted that the high standards for the protection of worker’s rights and the environment make this a model for future trade agreements, which must be both free and fair.

Agreement Must be Approved by Congress

Obama stated that he looked forward to working with Congress and leaders in both parties to get the agreement approved and to ensure that America competes aggressively for the jobs and markets of the 21st century. He noted that the agreement is an integral part of U.S. efforts to double its exports over five years.

Agreement Would Eliminate Tariffs on Most Industrial and Consumer Goods

A White House fact sheet states that the Agreement would eliminate tariffs on over 95 percent of industrial and consumer goods within five years.

Autos: The agreement would improve market access for U.S. auto companies by addressing ways Korea’s system of automotive safety standards have served as a barrier to U.S. exports. Similarly, the agreement would address proposed Korean environmental standards that could serve as a barrier to U.S. exports -- striking a balance that respects the shared desire to reduce the environmental impact of automobiles, but would alleviate a real burden placed on American auto companies importing smaller volumes into Korea.

Progress was made in several additional areas of automotive policy including on regulatory transparency and an acceleration of tariff reductions on electric cars that will encourage the development of green auto technologies.

A special auto safeguard would level the playing field for American auto workers, ensuring that the American industry does not suffer from harmful surges in Korean auto imports due to the agreement. Further adjustments to general auto and truck tariffs would give U.S. auto companies and American workers the opportunity to increase sales in Korea before U.S. tariffs on Korean autos come down.

Manufacturing: The U.S-Korea trade agreement would create new opportunities for U.S. manufacturers seeking to export to Korea in two ways: first, it would eliminate tariffs, or duties, charged when U.S. exports come into Korea; and it would address non-tariff barriers to U.S. exports -- whether by eliminating barriers that are in place today, or by establishing a framework to prevent non-tariff barriers from arising in the future.

Under the agreement, U.S. exports of aerospace, automotive, consumer goods, electrical/electronic goods, metals, scientific equipment, and shipping and transportation equipment would gain duty-free access to the Korean market.

Beyond tariffs, the agreement would establish strong new rules on how Korea will develop regulations applied to U.S. exports, and contains state-of-the-art protections on intellectual property rights (IPRs). Strong protection for intellectual property is critically important for U.S. industry’s knowledge-based manufactured goods.

Services: Korea has agreed to match the high level of openness provided by the U.S. in a host of services sectors, ranging from energy and environmental services to financial services and distribution.

The agreement’s provisions on cross-border services, telecommunications, and electronic commerce offer particular advantages to the information and communications technology service sector -- an area where the U.S. excels -- which would benefit small- and medium-sized American enterprises without the resources to establish an office in every market they serve.

The agreement would also discourage Korea from setting technology standards or other requirements in a way that would give domestic producers an advantage over American service suppliers. And the agreement addresses all service sectors in the Korean market, and all modes of supply, and would apply to new and innovative services that may develop as markets evolve.

Agricultural Products: The U.S. is already Korea’s top supplier of agriculture products, including of a broad variety of farm products such as almonds, fresh cherries, hides and skins and corn.

The U.S.-Korea trade agreement would create new opportunities for U.S. farmers, ranchers and food processors seeking to export to Korea’s 49 million consumers, giving American agricultural producers more market access in two ways -- by getting rid of tariffs charged when U.S. exports come into Korea, and by laying out a framework to tackle other barriers to U.S. exports -- even those that might arise in the future.

American beef volumes have increased by more than 120 percent in just a few years under the existing protocol -- helping producers to regain much of the market share they lost earlier. Tariff eliminations on Korea’s existing 40 percent tariff would further boost beef exports, saving an estimated $1,300 per ton of beef imported to Korea -- savings that would total $90 million annually for U.S. beef producers at current sales levels.

Investment: The U.S.-Korea trade agreement would increase investment opportunities for U.S. companies in Korea by providing them access to the market, strong investor protections, and a way for investors to enforce their rights.

The agreement would not provide Korean investors in the U.S. any more investment protections than U.S. law gives American investors here, and it ensures that the U.S. government and state and local governments can continue to regulate in the public interest, including protecting public health, public safety, and the environment.

Financial Services: The financial services chapter in the U.S.-Korea agreement would provide significantly improved market access into Korea for American financial services firms -- supplementing and modifying the agreement’s rules on investment and services to allow American companies to provide financial services in the Korean market.

At the same time, the agreement would preserve the right of U.S. financial regulators to take action to ensure the integrity and stability of financial markets or address a financial crisis. Under the agreement, Korea also commits to treat U.S. financial institutions comparably to their competitors in the Korean market.

Government Procurement: The U.S.-Korea agreement would expand U.S. firms’ access to the $100 billion Korean government procurement market, creating new opportunities for exporters, and ensuring that U.S. firms will get to bid on contracts on a level playing field with Korean firms.

At the same time, the agreement’s government procurement rules would ensure that certain American business sectors -- such as small businesses or textile companies bidding on Department of Defense procurement -- do not face foreign competition for key government contracts here at home. The agreement’s procurement obligations would also maintain American environmental and labor safeguards.

Labor Rights: The agreement would set high standards for protection of workers’ rights in trade agreements -- including obligations for Korea to respect fundamental labor rights, not to weaken the laws that reflect those rights in any way, and to effectively enforce labor laws designed to ensure a level playing field for American workers to compete.

The agreement contains labor elements that were first outlined on May 10, 2007, in a bipartisan, Congressionally-led initiative to incorporate high labor standards into America’s trade agreements. The Korean government, which has already demonstrated a significant commitment to labor rights, would be held to the same level of accountability for meeting labor commitments as it is for meeting other commitments in the agreement.

Environmental Commitments: The Environment Chapter of the U.S.-Korea agreement contains environmental elements that were first outlined in the bipartisan, Congressionally-led May 10 initiative to incorporate high environmental standards into America’s trade agreements.

Under the agreement, the Korean government -- which has already demonstrated a significant commitment to environmental protections -- would be held to the same level of accountability for meeting environmental commitments as it is for meeting other commitments in the agreement

(See ITT’s Online Archives or 07/05/07 news, 07070520, for BP summary on signing of KORUS FTA.

See ITT’s Online Archives or 06/28/10 news, 10062828, for BP summary of President’s statement on goal to address outstanding KORUS FTA issues in fall 2010.

See ITT’s Online Archives or 12/01/10 news, 10120143, for BP summary of Congressional trade leaders urging Administration to stand firm on KORUS FTA beef and auto issues.)

President Obama’s statement (12/03/10) available here.

White House Fact sheet (overview) available here

White House Fact sheet (economic value) available here.

White House Fact sheet (U.S. auto exports) available here.