Korean Parliament Begins Debate On US FTA

by Mary Swire, Tax-News.com, Hong Kong

14 February 2008

It emerged on Wednesday that debate has begun in the South Korean Parliament with regard to the free trade agreement with the United States which was concluded on April 1, 2007, and signed on June 30 after eight formal rounds of negotiations that took place over ten months.

In agriculture, the KORUS FTA will create new export opportunities for American farmers and ranchers by eliminating and phasing out tariffs and quotas on a broad range of products. Under the agreement, roughly $1.91 billion, or 64%, of Korea’s agriculture imports from the United States will be immediately duty-free. Most remaining tariffs and quotas will be phased out over the first ten years that the agreement is in force.

In industrial goods, nearly 95% of bilateral trade in consumer and industrial products will be duty-free within three years of entry into force of the Agreement, with virtually all remaining tariffs eliminated within 10 years.

Specifically with regard to automobiles, the KORUS FTA marks an unprecedented step in eliminating the tariffs and non-tariff barriers that US auto makers have identified as the impediments to their success in Korea’s large market.

Critics of the FTA in the United States, including several Congressional Democrats, contend that the agreement would benefit Korean businesses and manufacturers far more than their American counterparts, particularly in the automotive sector.

Additionally, there is pressure from legislators in the United States with regard to the Korean position on beef imports (currently restricted as a result of a 2003 outbreak of 'Mad Cow Disease').

Commenting in January on this disputed area, US Trade Representative, Susan Schwab announced that:

"The good news is that we continue to work in good faith with our Korean colleagues to fully re-open this important market and ensure that US beef gets treated with the respect that international standards of science demand."

It is hoped that the deal will be approved by the Korean legislature in the coming months, following which the pressure will be on for US politicians to do likewise.

However, the ongoing dispute over beef imports is expected to slow the FTA's progress in both countries.

Korean President-elect Lee Myung-bak is reportedly seeking closer relations, economic and otherwise, with the United States over the course of his presidency.

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