Tag Archives: KORUS

Businesses, Politicians Clash Over US-South Korea Free Trade Agreement

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Since December, when President Barack Obama and South Korean President Lee Myung-bak announced that they made further progress on the US-South Korea Free Trade Agreement (KORUS-FTA), the agreement has been highly debated on its way to Congress. In order for the measure to take effect, both the Congress of the United States and the Congress of South Korea must ratify the agreement.

On one side, local and national business leaders are urging Congress to approve the agreement, citing the success of NAFTA and its effect on US exports and job creation. President Obama, at the time of his signing of KORUS-FTA, stated that deal would “boost US exports to 11 billion and support at least 70,000 jobs.”

Failing to act would hurt the US as well, proponents of the measure argue, as South Korea is in talks with Canada about a free trade agreement and has already inked one with the European Union. If approved, these agreements create a more attractive trading option for South Korean businesses than what the US has to offer, and thus inevitably decreasing the amount of US exports to South Korea.

korea-us-free-trade-agreementIf approved, the US will benefit from the gradual reduction of South Korea’s current tariffs of up to 40%, all the way down to zero in 95% of industries within three years, with most remaining tariffs being eliminated within ten years. This will obviously aid many trade industries by reducing the cost of trade and opening new opportunities, including the auto industry and the National Cattlemen’s Beef Association (NCBA), who, along with 60 other food and agricultural groups and companies, have sent a letter to Speaker of the House John Boehner (R-Ohio); House Democratic Leader Nancy Pelosi (D-Calif.); Senate Majority Leader Harry Reid (D-Nev.) and Senate Republican Leader Mitch McConnell (R-Ky.) in support of the recent agreement.

However, not all businesses and politicians support the agreement because they believe the agreement will actually hurt US businesses and create major job loss due to jobs going overseas. California, one of the US’s largest traders with Korea, lost 800,000 jobs due to NAFTA, according to the California Labor Federation, and would likely see further erosion of jobs with another free trade agreement.

California does not necessarily hold the trend for the rest of the US, as it shares the closest ties with South Korea with more than half of a million South Koreans living in the state, and thus is the most vulnerable economically.

Overall, free trade agreements will at the very least increase opportunities for US businesses to increase exports, and will likely save or create jobs as well. The free trade agreement is even more vital if the EU and Canada agreements get finalized, as US cannot afford to fall behind and lose export revenue to the Asian economic giant.

 

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US, South Korea to Meet to Discuss Pending Free Trade Agreement

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Reuters announced that the US and South Korea have plans to meet to further discuss the KORUS Free Trade Agreement.

Last week, two high-level officials “‘exchanged views on the timing and venue of an upcoming ministerial-level meeting on the trade agreement,’ said Carol Guthrie, a spokeswoman for the U.S. Trade Representative’s office.”

The two countries signed the agreement more than three years ago. It has languished because of U.S. auto industry concerns that it removes remaining U.S. tariffs on South Korean cars but does not do enough to eliminate non-tariff barriers that keep American cars out of South Korea.

Read the complete article: U.S. and South Korea eye date for trade pact meet.

In other news, the Governor of California, Arnold Schwarzenegger, called for ratification of the trade agreement during a speech made at the American Chamber of Commerce in Seoul:

ArnoldSchwarzenegger-trade-agreements-south-korea-KORUS“One of the most powerful tools to spread freedom, peace and prosperity is free trade and free enterprise. In his State of the Union Address, President Obama pledged to double American exports in five years and I commend him for his vision. Now we need to see the action,” said Governor Schwarzenegger. “The U.S.-Korea Free Trade Agreement, and two others, has been gathering dust in the halls of Congress for over three years. And while we stall, other global leaders are picking up the slack. The ratification of these agreements will lead to increased exports, production and investment, all of which create jobs at a time we need them most. So I say to Congress, if your number one priority is stimulating our economy, approve these free trade agreements so we can start putting people back to work — not next month, not next year, but right now.”

Read more of the Governor’s statement at: Governor Calls for Approval of U.S.-Korea Trade Agreement from the California Chamber of Commerce.

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In the Works: China, S. Korea, Japan Trade Agreement

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According to CCTV, China, South Korea, and Japan are meeting to investigate the possibility of a trilateral trade agreement between the Asian economic powerhouses.

According to a report by the ministry, South Korea will launch the joint study, in which government officials, scholars and business representatives from all three countries will participate.The report says that along with the trilateral agreement, the country will continue to push for settling separate bilateral trade agreements with China and Japan.

South Korea has been seeking more economic integration within the Northeast Asia by creating favorable conditions for free trade agreements.

Read the (very brief) complete article.

Analysis: Call South Korea duty-free butter, because it is on a trade agreement roll!

South Korea has been racking up trade agreements with the EU, India, New Zealand, and Canada recently. That is in addition to its existing agreements with Singapore, EFTA, ASEAN, Chile, and Peru.

South Korea is strongly expanding its competitive reach in the global market by offering its already competitive products (specifically cars and electronics) at what will be an even lower cost in markets like the EU, Canada, and New Zealand.

The possibility of this agreement creates even more pressure on the standstill KORUS trade agreement, which is awaiting approval by US Congress. If American products are to remain competitively priced in countries such as China, Korea, and Japan, passing KORUS will be key to their success.

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Obama Hopes to Pass KORUS Trade Agreement By 2010

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While visiting South Korea, President Obama announced his intention to pass the South Korea-US free trade agreement that is currently on hold, pending approval in Congress.

From the New York Times, on Thursday:

At a news conference in Seoul, South Korea, Mr. Obama and the president of South Korea, Lee Myung-bak, both declared their desire to renegotiate elements of the agreement and to have both countries ratify it as soon as possible.

“I am a strong believer that both countries can benefit from expanding our trade ties,” Mr. Obama said. “I have told President Lee and his team that I am committed to seeing the two countries work together to move this agreement forward.”

However, since Thursday it has become unclear whether the two nations will be able to renegotiate the terms of the agreement, as the South Korea foreign trade minister ruled out additional trade talks on Friday.

US Manufacturers oppose the agreement, saying it does too little to open the Korean market and they will face an influx of Korean competitors. Proponents counter that, with Korea’s new trade agreement with the EU, the US must approve this deal if it wants to remain competitive in both markets.

Read the complete article at: South Korea Trade Pact Is Revived by Obama

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KORUS Trade Agreement Moving Forward

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It’s been a busy month for South Korea’s international trade representatives!

While on a visit to the Washington, DC, Korean President Lee Myung-bak and senior officials worked out some plans with Commerce Secretary Gary Locke, ultimately signing a Memorandum of Understanding regarding:

High-Tech Trade. Deepening the collaborative high-technology relationship, including facilitating secure bilateral high-tech trade and investment by establishing a dialogue that will, among other things:

  • Share information and best practices on existing export control laws, regulations and policies related to high-tech trade;
  • Address issues such as the content and scope of control lists, classification of products, processing of license applications and other authorizations, preventive enforcement techniques and investigations of potential violations of export control rules; and
  • Cooperate in offering assistance to countries in need of export control support, especially with regards to high-tech trade.

The MOA also stipulates objectives to promote trade and investment and adopt best practices in industrial technologies and standards.

History Lesson: This agreement was initially negotiated back in April 2007 but has not been approved by either Congress or the National Assembly of South Korea. The office of the US Trade Representative has more info but nhas not yet updated the site with this MOU.

This could potentially be the biggest FTA deal since NAFTA and will have huge savings opportunities for companies to save on their duties by properly managing their trade agreements.

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