U.S.-Korea Free Trade Agreement: Potential Economy-wide ... - USITC

Imports currently supply 41 percent of the U.S. market for PSF. 314 The import share of the
U.S. market for polyester textile filament and polyester industrial filament in 2005 was 22
percent and 33 percent, respectively. 315
In fabrics, the expected growth in U.S. imports from Korea will likely be concentrated in knit
and woven industrial and specialty fabrics and will likely displace domestic production of
such fabrics. Korea was the third-largest source of U.S. fabric imports in 2006 with
11 percent ($953 million) of the total, reflecting significant positions in knit fabrics
(27 percent import share or $203 million) and specialty fabrics (13 percent or $116 million).
Korean producers reportedly are expanding output of industrial and specialty fabrics that use
information technology and biotechnology for use in tire-cord fabrics and engineering,
construction, and medical applications. 316 Industrial fabrics include high-strength
reinforcements, textile reinforcements, and laminated sheet goods that use the textile
reinforcements to make them stronger. The fabrics are used in awnings, tents and mobile
shelters, signs and banners, tarpaulins, commercial roofing membranes, health-care mattress
and seating covers, truck covers, conveyor belting fabrics for package handling and
treadmills, and geotextiles for water-containment linings and erosion control. 317
Regarding apparel, the FTA would give Korea immediate duty-free access to the U.S. market
for tariff lines covering 60 percent of U.S. apparel imports from Korea and phase out tariffs
on the remaining Korean goods over 5 years (20 percent of total) or 10 years (20 percent).
Korea is a key supplier of U.S. imports of hosiery and man-made fiber gloves and shirts. 318
Imports supply approximately 75 percent of the U.S. apparel market by value, based on the
landed duty-paid value. A trade source contends that apparel production still based in the
United States tends to follow niche domestic markets, to respond to government procurement
incentives (e.g., the Berry Amendment), 319 or to serve quick response needs of the domestic
market. 320 The expected increase in imports of apparel from Korea under the FTA could
displace domestic production slightly, as well as U.S. production-sharing trade with
preferential free trade partners, where U.S. and other firms make apparel from U.S. yarns and
fabrics and import the apparel into the United States free of duty under NAFTA and
CAFTA-DR. 321
314 Bermish, testimony before the USITC, June 20, 2007.
315 Fiber Economics Bureau, Fiber Organon, February 2006, 29.
316 KOFOTI, “Special Report: Korean Textile and Clothing Industry,” March 2007. The “2015 vision
plan” introduced by Korea’s Ministry of Commerce, Industry and Energy in November 2005 features the
development of advanced industrial textiles. KOFOTI, “Industry Scoreboard,” March 2007.
317 American Manufacturing Trade Action Coalition, written submission to the USITC, April 2006.
318 The “2015 vision plan” introduced by Korea’s Ministry of Commerce, Industry and Energy in
November 2005 features the development of infrastructure for digital, intelligent fashion apparel
technologies like “smart clothing” that will include state-of-the-art dyeing and processing technologies.
KOFOTI, “Industry Scoreboard,” March 2007.
319 The Berry Amendment (10 U.S.C. 2533a) requires the Department of Defense to give preference in
procurement to U.S.-made goods, including apparel, tents and tarpaulins, and fabrics, including all fibers and
yarns used in them and goods made from them. CRS, “The Berry Amendment: Requiring Defense
Procurement to Come from Domestic Sources,” April 21, 2005.
320 Burke, written submission to the USITC, March 24, 2006.
321 One U.S. industry source stated that the FTA would grant Korea immediate duty-free access to the
U.S. market for 60 percent of the textile product categories that it identifies as sensitive, including those
covered by the U.S.-China Textile Bilateral Agreement, threatening both U.S. domestic sales and U.S.
coproduction relationships in the NAFTA/CAFTA region. Tantillo, “U.S.-Korea Free Trade Agreement:
Potential Economy-wide and Selected Sectoral Effects,” written submission to the USITC, June 27, 2007.
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