KORUS FTA date set despite controversy in Korea
United States Trade Representative Ron Kirk announced last Tuesday that the free trade agreement between the U.S. and South Korea (KORUS FTA) will be implemented on March 15, six years after the initial discussions began in June 2006.
The move will help pave the way for both countries to boost their economic and political ties, according to reports. South Korea’s parliament approved the free trade pact in November of last year despite vehement protests from opposition lawmakers. The deal was signed in July 2007 and approved by Congress in October 2011. The two countries have been working to finalize the implementation date.
According to Korean reports, the KORUS FTA will help the Asian country’s economy expand more than 5 percent in the long term, leading to more exports and reduced trade barriers. The deal will also create about 350,000 jobs, Korean economists predict, helping to ease tightened labor market conditions there.
The U.S. ambassador to Korea has stated that the trade pact between the two countries is “vitally important” to both economies amid calls from the Korean opposition party to repeal it. But the scheduled implementation of the agreement is not free from conflict. South Korea’s opposition parties claim the agreement unfairly favors the U.S. The main opposition Democratic United Party has vowed to kill the agreement if it wins in April’s general elections unless Washington agrees to hold renegotiations to revise some clauses.
South Korea signed a similar deal with the European Union, which went into effect last July, and similar discussions are under way with Japan and China.
National Cattlemen’s Beef Association President J.D. Alexander praised the announcement.
“When the KORUS FTA is implemented, our competitive advantage will be secured. The KORUS pact will phase out tariffs on U.S. beef over the next 15 years and will make U.S. beef a more affordable and appealing choice for our valued Korean customers. This may very well be the most monumental bilateral trade pact our industry has ever witnessed,” he said.
But ambassador Sung Kim called the KORUS FTA a milestone in diplomatic relations and said that both sides were working to review the regulations as quickly as possible.
“Korea and the United States are now in the process of reviewing and discussing our respective laws and regulations,” he said.
“We are making our best efforts to get this done as quickly as possible, so both countries can begin realizing the benefits of the FTA.”
The pact was ratified by the U.S. in October and by Korea in November but the DUP has pledged to repeal it in its campaigns for the upcoming elections here.
Saying the agreement was “probably the most important achievement in our bilateral relationship in a generation,” Sung stressed that the agreement would tie both countries together as long-term partners.
“It’s important to realize that KORUS is more than trade statistics. Consumers in both countries will benefit greatly from tariff cuts. So it is vitally important for both economies and is a natural extension of our mature trading relationship,” he added.
In his speech, he also promised continued U.S. military support for South Korea, despite the goal to reduce the number of U.S. installations and facilities from 107 to 48 by 2016.
“The U.S. will continue to back the defense of the Republic of Korea with full might of the U.S. military,” he said in the speech released by the U.S. embassy.
“Not only will USFK emerge with a significantly smaller footprint, but the consolidation will increase readiness and efficiency, and reduce costs.”
The ambassador also stressed that Pyongyang’s new leadership under Kim Jeong-un would not sway U.S. policy.
“The United States remains committed to peace and security on the Korean peninsula, denuclearization, the promotion of human rights and the peaceful reunification of Korea,” he said, adding that Washington and Seoul would continue to engage the North in talks to encourage Pyongyang to take “concrete and irreversible steps toward denuclearization.”
“I cannot stress strongly enough that we have, and will continue, to coordinate with Seoul on every step of our engagement with North Korea. As we have said privately and publicly, if Pyongyang wants a better relationship with the rest of the world, the first stop has to be in Seoul,” he added.
The announcement follows the completion over the President’s Day weekend of work by the U.S. and Korea to review each other’s laws and regulations related to the implementation of the agreement. The U.S. has exchanged diplomatic notes with Korea in which each side confirmed that they had completed their applicable legal requirements and procedures for the agreement’s entry into force.
“In a few short weeks, the promise of the U.S.-Korea trade agreement—including tens of thousands of exportsupported jobs with better wages—will start to come home for American businesses and working families,” said Kirk. “President Obama insisted that we get this agreement right by forging a better deal that led to strong bipartisan support in both houses of Congress. Entry into force of this agreement will open up Korea’s $1 trillion economy for America’s workers, businesses, farmers and ranchers while also strengthening our economic partnership with a key Asia-Pacific ally.”
On March 15, almost 80 percent of U.S. industrial product exports to Korea will become duty-free, including aerospace equipment, agricultural equipment, auto parts, building products, chemicals, consumer goods, electrical equipment, environmental goods, all footwear and travel goods, paper products, scientific equipment and shipping and transportation equipment, according to a press release from the Executive Office of the President.
Also on March 15, almost two-thirds of U.S. exports of agricultural products to Korea will become duty-free, including wheat, corn, soybeans for crushing, whey for feed use, hides and skins, cotton, cherries, pistachios, almonds, orange juice, grape juice and wine.
The agreement also includes a number of significant commitments related to non-tariff measures that will also come into force on March 15, including obligations related to motor vehicle safety and environmental standards, enhanced regulatory transparency, standard-setting, technology neutrality and customs administration, the release says.
These commitments are backed by the agreement’s strong enforcement provisions, which will enable the U.S. to hold Korea to its promises under the pact.
“With increasing demand and tightening supplies, movement of the KORUS FTA should encourage cattlemen and women to think beyond the current prices for live cattle and think long term. Think about where demand is heading and look beyond the borders of the United States. Now is the time to retain heifers and rebuild what has now become the smallest U.S. cowherd in more than five decades. In order to meet increasing demand, we have to have the beef. Now is the time,” Alexander said.
“Ten percent, or approximately 12 million American jobs, depend on exports. With 96 percent of the world’s consumers living outside U.S. borders, it’s critical that we expand our opportunities to sell beef in the international marketplace if we want to keep American family farms in business,” he added. — Traci Eatherton, WLJ Editor