US-Korea FTA Welcomed By US Business Community

by Glen Shapiro, LawAndTax-News.com, New York

05 June 2007

There has been strong support for the recently unveiled United States-Korea draft Free Trade Agreement, according to the United States Trade Representative (USTR).

The two countries last week released the full draft text of the FTA, negotiations on which were completed on April 1.

The Free Trade Agreement contains 24 chapters, which provide for significant reductions in tariffs on industrial and agriculture products, and include state-of-the-art commitments in competition policy, e-commerce, transparency, pharmaceuticals/medical devices, intellectual property rights (IPR), investment, and services.

Under the terms of the FTA, nearly 95% of bilateral trade in consumer and industrial products becomes duty-free within three years of entry into force of the agreement, with most remaining tariffs eliminated within 10 years.

The KORUS FTA will eliminate discrimination in engine displacement-based taxes, long a significant impediment to market access in Korea. The agreement contains strong commitments to addresses the specific standards-related concerns raised by US auto manufacturers and to create a working group to review auto-related regulations being developed as an early warning mechanism to prevent new problems from arising and to promote good regulatory practice in Korea.

The agreement also contains a special enhanced dispute settlement mechanism for auto-related measures, with strong remedies to deter actions on autos that are inconsistent with the agreement.

Comments received late last month from the US business community have revealed that there has been an enthusiastic reception for the pact.

John J. Castellani, President of the Business Roundtable, observed that:

"The new FTA with Korea will vastly improve our competitiveness in Korea by eliminating trade and regulatory barriers on our exports and investments. It will also reinforce the ability of the United States to become more competitive in Asia, one of the most important and fastest growing markets today.”

Speaking on behalf of the American Chamber of Commerce in Korea, meanwhile, Chairman William Oberlin announced that:

“This is a historic moment for the US and Korea, and will take the Korea-U.S. economic relationship to the next level.”

“We are pleased to hear that our two governments have reached an agreement, which should expand trade and investment as well as strengthening the overall ties between our two countries. A successful agreement will also be important to the region’s development and the future trade and investment environment in Asia," William Rhodes, Chairman of the US-Korea Business Council added.

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