U.S-Korea FTA Archives - Shopfloor

Korea Trade Agreement Boosts Exports, Provides Mechanisms to Address Challenges

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Manufacturers cheered when the U.S.-South Korea Free Trade Agreement (KORUS FTA) entered into force three years ago yesterday. The deal aimed to open Asia’s fourth largest economy to U.S. exports of industrial goods and a wide array of other products and services. It established strong transparency rules, competition policy and intellectual property and other protections that sought to establish a level playing field.

While the KORUS FTA is still being implemented and challenges remain, manufacturers are seeing important gains. Roughly 80 percent of Korean tariffs on U.S. products have already been eliminated, helping to drive strong sales of plastics, processed foods, semiconductor equipment and many other manufactured products. Overall, U.S. manufactured good exports to South Korea increased $2.6 billion between 2012 and 2014, reaching a record high of $37.4 billion last year. Read More

Finally the U.S.-South Korea Free Trade Agreement Takes Effect

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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.

U.S.-South Korea Free Trade Agreement to Take Effect in March

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The National Association of Manufacturers is pleased by the news today that finally, the U.S.-Korea trade agreement will take effect on March 15, 2012. The United States has exchanged diplomatic notes with Korea in which each side confirmed that it had completed applicable legal requirements and procedures for the agreement’s entry into force.

According to the U.S. Government, on March 15, almost 80 percent of U.S. exports of industrial products 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. 

This matters because Korea offers U.S. manufacturers a growing opportunity for exports within a dynamic and expanding market. Korea is our seventh-largest trading partner and is a crucial export destination for U.S. manufacturing. Korea is one of the fastest-growing industrial economies in Asia, and its GDP has grown by 67 percent since 2000, according to the International Monetary Fund (IMF).

Small and medium-sized manufacturers will strongly benefit from the U.S.-Korea agreement: nearly 19,000 small and medium-sized companies export goods to Korea, representing 90 percent of total U.S. exporters. Manufactured goods are the vast majority of U.S. exports to Korea. In 2010, the U.S. exported $31.6 billion worth of manufactured goods to Korea, and Korea was our fastest-growing export destination in the world, with a 37 percent increase over 2009 exports. Manufactured goods make up over 75 percent of total U.S. merchandise exports to Korea. Read More

Choosing the Right Tools for Economic Growth

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Nina Easton, senior editor-at-large of Fortune, looks at the Administration’s efforts to revive the economy.

Talk to business leaders — the people who actually hire people — and you don’t hear worries that Washington is running out of tools. What you hear, pretty consistently, is that this White House stubbornly insists on reaching for the same wrong toolbox.

One policy from the right toolbox, she writes, is free trade.  Members of both parties support free trade policies, but that bipartisan accord has yet to break the stalemate on three pending trade agreements: Korea, Colombia and Panama.

“Overseas markets are ripe for American products,” says Jay Timmons, CEO of the National Association of Manufacturers, who likes to repeat the mantra that 95% of customers are abroad.

The administration has given lip service to the importance of this fact — the President says he wants to double exports. But the only three free trade agreements now before Congress — with South Korea, Colombia, and Panama — have yet to move forward, trapped in negotiations over spending more money on trade adjustment assistance. According to the U.S. International Trade Commission, the South Korea deal alone would result in an estimated net increase in American exports of up to $4 billion in its first decade. No magic bullet, but nothing to sneeze at either.

Meanwhile, economies around the globe are forging deals with each other. As Timmons notes: “There are 120 free trade agreements being negotiated. We’re party to one. We’re getting our clocks cleaned.”

Easton goes on to highlight some of the NAM’s other concerns about U.S. policy, namely the corporate tax rate (the second highest in the world) and the high cost of doing business in the country.

Earlier: Timmons writes about the pending trade pacts in the Daily Caller.

Timmons on Free Trade in the Daily Caller

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NAM President and CEO Jay Timmons highlights the pending free trade agreements with Colombia, Panama, and South Korea and discusses why they are critical to U.S. competitiveness this morning in the Daily Caller. He writes,

The pending trade agreements with Colombia, Panama and South Korea offer our elected officials a choice — support economic expansion and job growth or retreat from the world economy and watch U.S. manufacturing stagnate as our foreign competitors thrive. U.S. manufacturers are eager to remove the burdens on trade and grow their businesses.

The trade agreements have been pending for years now, and it’s time for Congress and the President to act.

Governors Push for FTA Approval

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This week the Senate Finance Committee holds two hearings on pending free trade agreements (FTAs).  Tomorrow, the committee will consider the Panama FTA, and Thursday the committee will turn to the South Korea agreement.

Ahead of those hearings, 25 governors have written congressional leaders urging them to pass the Colombia, Panama, and Korea FTAs.  The bipartisan group writes,

As the chief executives of our respective states and territories, we appreciate how important international trade and investment are to the economic vitality of our jurisdictions, presenting important opportunities for workers, and enhancing our overall competitiveness.  Export-related jobs pay better than non-exporting industries and, with nearly 95 percent of the world’s consumers living outside of the U.S., exports have been the focus of increased job growth in recent years.

These trade agreements have been awaiting congressional approval since 2007 (and 2006 for the Colombia deal).

Read the whole letter here.

Hearing Set on Trade Pacts as Senators, WaPo Call for Action

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From the Senate Republicans, @Senate_GOP:

At 3:30 ET today, Leader McConnell, Sen. Orrin Hatch, and Sen. @robportman will hold a press conference on free trade agreements.

Sens. McConnell, Hatch, and @robportman will call for immediate action from the president on pending free trade agreements.

Washington Post editorial, “Time to act on free trade:U.S. agreements with South Korea, Colombia and Panama should be approved — soon“:

The potential for a trade policy train wreck is real. Everyone needs to focus less on the political tit for tat and more on the policy case for getting these deals done as soon as possible, which is clear and strong. “It is time to identify the specific steps Colombia and Panama must take to move forward,” Mr. Baucus said Wednesday, “so we can finally approve our free-trade agreements with these countries, increase U.S. exports and create jobs here at home.” From a Democrat, that can hardly be considered unfriendly advice, and Mr. Obama would be wise to take it.

House Ways and Means Subcommittee on Trade, “Brady Announces First in a Series of Three Hearings on the Pending, Job-Creating Trade Agreements“:

Congressman Kevin Brady (R-TX), Chairman, Subcommittee on Trade of the Committee on Ways and Means, today announced that the Subcommittee will hold a series of hearings on the pending trade agreements with Colombia, Panama, and South Korea. According to the President’s own statements, these agreements have the ability to create over 250,000 American jobs. The first hearing will address the agreement with Colombia. The hearing will take place on Thursday, March 17, 2011, in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 10:00 A.M. The Subcommittee will soon advise regarding hearings on the trade agreements with Panama and South Korea.

Testifying on behalf of the National Association of Manufacturers will be William D. Marsh, vice president legal – Western Hemisphere — for  Baker Hughes. Also scheduled to testify is Ambassador Miriam Sapiro of the U.S. Trade Representatives Office.

The USTR on Tuesday also hosts the American Chamber of Commerce in Korea on its annual visit to Washington, D.C. Last week U.S. and Colombian officials met in Washington to discuss the pending FTA. (Also here.)

The Miami Herald reports on President Obama’s upcoming trip to Brazil, Chile and El Salvador, “President Obama’s Latin agenda takes shape.”

Senators Tell Administration: Move All Three Trade Agreements

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U.S. Trade Representative Kirk testified on the President’s 2011 Trade Agenda at the Senate Finance Committee this morning. As expected, the focus was squarely on lack of progress on the Colombia and Panama free trade agreements. Unfortunately, despite an advance request by the Chairman and Ranking Member for a specific timetable on concluding the two agreements, Ambassador Kirk did not provide much of a road map on how the U.S. will proceed in addressing what the Administration feels are outstanding issues in both agreements.

U.S. Trade Representative Ron Kirk

When he appeared in front of the House Ways and Means Committee last month, Kirk promised the Administration wants to move the Korea trade agreement (KORUS) as soon as possible, and it would intensify efforts to resolve outstanding issues in the Colombia and Panama agreements so they could be moved as quickly as possible to Congress for approval –- by the end of 2011 if possible. At the time, we argued that all three agreements need to move as quickly as possible. We still absolutely believe this is the way things should proceed. The agreements with Colombia, Korea and Panama have languished since 2007, while our competitors in Europe and Asia continue to move aggressively to open those markets and gain preferential access for their manufactured goods exports.

The Chairman and Ranking Member of the Senate Finance Committee made it very clear they feel the same way. Chairman Max Baucus (D-MT) was crystal clear: “The time is long past to ratify the Colombia agreement,” said, continuing, “None of these agreements will pass unless they are all packaged together this year.” Ranking Member Orrin Hatch (R-UT) told Ambassador Kirk that he was tired of unfulfilled promises on Colombia and Panama. “It is the Administration’s inaction that speaks volumes – and these promises we’ve heard are inadequate,” the Senator said. Sen. Hatch pulled no punches in saying that he will view any attempt to move the KORUS FTA without action on Colombia and Panama in a very negative light. Read More

From the President, a Solid Trade Agenda. Now, Let’s See Action

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President Obama released his 2011 Trade Agenda on Tuesday. It seems a bit more forward in promising action on trade than in previous years, which is good. America has effectively been in a time-out on trade for the last four years, and our industrial competitors around the world have been using that to their distinct advantage. The European Union, Korea, Canada, Australia and other nations have been in a flurry of bilateral and regional trade agreement negotiations that will provide their exports with preferential treatment at the expense of our own.

The President’s 2011 agenda sets forth a number of highly laudable goals, including passage of the U.S.-Korea Free Trade Agreement (FTA), continued support for the National Export Initiative (NEI) goal of doubling U.S. exports in five years, concluding a balanced and ambitious agreement to the World Trade Organization (WTO) Doha Round, finishing negotiations on the Trans-Pacific Partnership (TPP), and bringing Russia into the WTO. He also promises engagement with Colombia and Panama to resolve outstanding issues so they can be sent to Congress for approval. President Obama also calls for strong enforcement of our trade laws, strong protection of our intellectual property, commits to continuing America’s core strengths in innovation and competitiveness.

The agenda is certainly one that manufacturers can endorse. Two-thirds of U.S. exports are manufactured goods.

It’s one thing to set goals, and another to deliver them. On the pending FTAs, the National Association of Manufacturers wants all three pending agreements submitted to Congress and acted upon as quickly as possible. Passing the three pending FTAs is the fastest way to aid our national goal of doubling exports. The Korean deal is huge for manufacturers. The strides Colombia has made over the last decade are nothing short of astounding, and the commitments it has already lived up to in addressing labor issues have been exemplary. Panama has met all demands made upon it. There is strong bipartisan support in Congress for all three agreements, and it is quite possible we could celebrate Flag Day by opening three new markets worth $13 billion annually in increased U.S. exports. By the Administration’s math, that’s more than 60,000 new jobs that could be created.

On the WTO Doha Round, the Administration has been correct in refusing to settle for the anemic texts on the table – they do not open high-value markets in advanced developing nations. The NAM is in close alignment with this position. Without significant concessions by Brazil, China, India and others, the Doha Round will result in virtually no new benefits for manufacturing in America. We continue to urge Ambassador Kirk and his team to drive this point home to the recalcitrant negotiators in those nations – if they can make commitments equal with their economic size, the entire world will reap the benefits.

The President’s annual Trade Policy Agenda, like the annual Budget, is a chance for the Administration to put forth its philosophical views on how it plans to engage in market liberalization and economic growth. There is much here that, if it can be delivered – and quickly – would create jobs and increase our domestic economic development. The key question is not what the Administration wants to do, it’s how fast the President is willing to do it.

EU Approves Free Trade Pact with Korea, Gains Edge over U.S.

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The European Parliament approved the EU-Korea trade agreement today, with 465 votes in favor, 128 against and 19 abstentions. The agreement will take effect on July 1, 2011, immediately removing the vast majority of Korea’s tariffs on manufactured goods (which average 8 percent) imported from European Union countries. You can read all about it here: http://trade.ec.europa.eu/doclib/press/index.cfm?id=680

This approval is a notable development, because it is the first time that the European Parliament exercised co-decision powers on trade agreements. Prior to the Lisbon Treaty, approval of trade agreements rested entirely within the Council. Now, the European Parliament must approve all trade agreements signed by the EU – putting them much closer to the U.S. model, where Congress must approve our trade agreements. Many speculated that this agreement might face a closer vote for approval in the EU Parliament. Still, 76 percent voted to approve –- a percentage far higher than most agreements receive in the U.S. Congress. The European Parliament obviously knows what manufacturers in America know: Removing foreign trade barriers is a boon for exports, jobs and economic growth.

The majority of the U.S. Congress knows this too, and wants to approve the three pending trade agreements we have with Korea, Colombia and Panama. Of course, before our Congress can approve trade agreements, they need the President to send them up. Our pending agreements have been awaiting Congressional approval since 2007. The President has indicated he will quickly transmit the U.S.-Korea FTA to Congress with an eye toward seeking approval in a matter of weeks – but that leaves Colombia and Panama languishing.

Together, the U.S. International Trade Commission (ITC) estimates the three agreements are worth more than $13 billion in new U.S. exports. The majority of those exports will be manufactured goods. Tens of thousands of American jobs will be created and sustained as a result of these trade agreements. They remove tariff and non-tariff barriers, open markets for our goods, give our manufactured products preferential treatment. The longer we hesitate, the more our competitors win our market share as they approve their own trade agreements. The time to move on trade is now.