The U.S.-Korea Free Trade Agreement: Well Worth the Wait!

The U.S.-Korea Free Trade Agreement (KORUS FTA) goes into force on March 15, 2012 and represents a major step toward President Obama’s 2010 National Export Initiative (NEI) goal of doubling U.S. exports in five years. KORUS FTA was signed in June 2007 by then Presidents George W. Bush and Roh Moohyun but faced years of political hurdles in both countries before final ratification in autumn of 2011. Upon implementation of KORUS FTA, 80 percent of American consumer and industrial product exports to Korea will become duty-free, followed by duty-free status for 95 percent within five years of the agreement’s implementation. Most tariffs remaining after the five-year mark will be lifted in ten years.

KORUS FTA offers substantial economic benefits to the United States. Hailed by the U.S. Trade Representative’s Office (USTR) as the most significant trade agreement negotiated by the U.S. since the North American Free Trade Agreement (NAFTA) in the 1990s, KORUS FTA is expected to result in greater growth in economic output than America’s last nine agreements combined! According to the U.S. International Trade Commission (ITC), tariff reductions alone in the agreement are expected to add between $10 billion and $12 billion to the annual U.S. Gross Domestic Product and $10 billion to annual merchandise exports to Korea. Korea’s strong economic position is one reason for the opportunities created by this FTA. With an economy that is close to $1 trillion and a 2010 growth rate that exceeded 6 percent, Korea is primed to purchase America’s goods and services helping to speed our economic recovery.

KORUS FTA’s benefits will be felt in numerous business sectors. The U.S. manufacturing sector will benefit both from the elimination of tariffs on its exports and the enhanced intellectual property rights (IPR) protections included in the agreement. IPR protections are vital to America’s innovation economy. KORUS FTA will open Korea’s $580 billion services market to U.S. firms. Provisions within the agreement on telecommunications, cross-border services and e-commerce benefit the communications and technology sector and KORUS FTA’s financial services chapter offers better market access for U.S. financial services firms wanting to access the Korean market. U.S. law firms are another beneficiary of the FTA and will be able to open offices immediately upon implementation of the agreement to work on international contracts and disputes. They will be eligible to perform Korean legal work in five years. We are already Korea’s largest supplier of agricultural goods, and with the reduction and elimination of various tariffs, our market share is likely to increase under the FTA.

KORUS FTA will create American jobs. USTR estimates that over 70,000 U.S. jobs will be created from the additional exports of goods alone! Jobs supported by exports tend to pay 13 to 18 percent higher than the national average, underscoring why governors or lieutenant governors from 22 states plan to conduct trade missions to Korea this year. In order to determine the effect, including job creation, of KORUS FTA’s implementation on your state, click on the following link to visit the USTR’s web page. http://www.ustr.gov/uskoreaFTA/jobs

KORUS FTA is the natural economic complement to the strong strategic partnership between our two democracies. Until 2003, the United States was Korea’s largest trading partner but in recent years, we have been supplanted by the People’s Republic of China, Japan and the European Union which entered into its own trade framework with Korea in July 2011. KORUS FTA will strengthen the U.S.-Korea bilateral trade relationship and will cement strategic ties as well. Combined with negotiations on the Trans-Pacific Partnership which are expected to wrap up by the end of the year, the U.S.-Korea Free Trade Agreement will help secure America a prominent place in Pacific rim trade.

In Depth: Federalism

Genuine accountability to hardworking taxpayers results when state and local legislators work with members of the community to determine a plan of action that is right for each individual state, city or town. Real solutions to America’s challenges can be found in the states – America’s fifty laboratories of democracy…

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