Today, after a five year wait, manufacturers in the United States can finally realize the benefits of the Korea-U.S. Free Trade Agreement (KORUS). Starting today Korea’s tariffs on over 9,000 U.S. products disappear – covering over 80 percent of all of Korea’s tariffs on U.S. products. The remaining 20 percent will be eliminated in stages over the next few years.
This is a big deal. Korea is the fourth largest market in the world outside the United States, counting the European Union as a single market, and it imports nearly $300 billion of manufactured goods annually. Manufacturers in the U.S. have only 11 percent of that market, but are now poised to make gains.
As KORUS takes Korea’s average 8 percent import duties to zero for manufacturers in the U.S., they are getting an advantage over many of our competitors, and are regaining a level playing field with our European Union competitors, whose free trade agreement with Korea went into effect last year.
The NAM advocated strongly with the Administration and Congress to win passage and implementation of KORUS, and we are very pleased that manufacturers in the United States at long last are obtaining the open access to this market that we have sought.
Large and small firms stand to benefit. In fact, 90 percent of the companies in the U.S. now exporting to Korea are small or medium-sized firms — 18,000 of them, and almost all of them will benefit. This is truly a great day for American exporters.
Korean firms also will gain by U.S. duties being eliminated, but U.S. tariffs on Korean products were already low – averaging only 1.5 percent. Additionally, it is likely that many Korean gains in the U.S. market will come by displacing imports from other countries, as is also likely to be the case for American exports to Korea.
KORUS will benefit the economies of both countries and is truly win-win. Five years in the waiting, but the day is here at last. Now we need to move on to open more markets.
Frank Vargo is vice president of international economic affairs, National Association of Manufacturers.