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US And Korea Publish Draft Text Of FTA

by Glen Shapiro,, New York

28 May 2007

The United States and Korea on Thursday released the full draft text of the United States-Korea Free Trade Agreement. Negotiations on the agreement were completed on April 1.

Commenting on the newly-published agreement, US Trade Representative Susan C. Schwab announced that:

“As we have underscored since we completed negotiations on the Agreement, the KORUS FTA is a strong, comprehensive deal that will bring concrete benefits to U.S. manufacturers, services providers, farmers, ranchers, and workers, as well as the people of Korea. The text lays out the details of this historic Agreement between two large countries with complex, modern economies."

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.

However, the draft text does not yet include provisions that reflect the recently-concluded agreement between Congress and the Administration on labor rights, environmental safeguards and other issues that have created a new, bipartisan path forward on trade. The Administration and Congress are still in the process of converting this agreement into formal text.

According to the USTR:

"When that process is complete, the United States looks forward to working together with Korea to reflect that agreement."

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