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

imports from and exports to Korea. Although semiconductor products receive duty-free
treatment through the ITA and the recently negotiated Multi-Chip Packaging (MCP)
Agreement, concerns remain regarding other areas such as trade remedies and conformity
assessment measures. 419 The semiconductor industry, through the WTO, has managed to
resolve some issues relating to nontariff barriers prior to the FTA. The most recent WTO
semiconductor case involved a dispute over alleged subsidies provided by the Government
of Korea to a Korean manufacturer of dynamic random access memory (DRAM)
semiconductors. The case was concluded in June, 2005, with the WTO Appellate Body
ruling in favor of the United States. 420
U.S. exports of household appliances within this sector generally are assessed an 8 percent
Korean duty and are likely to benefit from the immediate elimination or phased reduction
of tariffs. The potential benefits of the FTA’s nontariff provisions, particularly standards and
conformity assessment, would likely facilitate increased exports of household appliances. 421
One major U.S. household appliance company reported that exports to Korea continue to be
encumbered by Korean government restrictions regarding certification, testing, and other
standards related practices that have until recently stymied exports of these products. 422 The
United States and Korea are currently engaged in informal discussions that address these
issues, and any agreement reached may complement the U.S.-Korea FTA.
Views of Interested Parties
Various reports issued by several ITACs representing machinery and equipment sectors
expressed their support for the FTA. The ITAC for Aerospace Equipment (ITAC 1) stated
in its report that the FTA would be “WTO consistent” and a “high quality”agreement in
terms of “ coverage and liberalization levels.” Further, ITAC 1 reported the FTA would lead
to greater demand for products covered by their committee (aircraft and engines) by
increasing GDP and trade between the two countries, which would result in greater air
travel. 423 The ITAC on Consumer Goods (ITAC 4) expressed its support for provisions
granting immediate duty-free access for products such as heavy motorcycles and provisions
allowing trade in remanufactured goods. 424 Similarly, the ITAC for Information and
Communications Technologies, Services, and Electronic Commerce (ITAC 8) expressed its
support for the FTA regarding provisions that would improve market access for U.S. exports
of information technology products and equipment. 425
The ITAC on Automotive Equipment and Capital Goods (ITAC 2) was, however, divided
in its support for the FTA. Industry representatives of capital goods manufacturers, such as
U.S. manufacturers of electrical equipment, expressed support for the FTA; they indicated
419 SIA, “Comments Re: No. TA2104-24, U.S.-Korea Free Trade Agreement: Potential Economy-wide
and Selected Sectoral Effects,” written submission to the USITC, June 25, 2007. In SIA’s written
submission, SIA states that “MCP-like” devices do not receive duty free treatment under the FTA.
420 USTR, “United States Wins WTO Semiconductor Case,” June 27, 2005.
421 See chap. 5 of the Commission’s report for additional information regarding the FTA’s TBT
provisions.
422 U.S. industry representative, telephone interview by Commission staff, August 7, 2007.
423 ITAC (1) for Aerospace Equipment, The Industry Trade Advisory Committee for Aerospace Equipment
Report, April 25, 2007, 2.
424 ITAC (4) on Consumer Goods, Report, April 26, 2007, 3–4.
425 ITAC (8) for Information and Communications Technologies, Services and Electronic Commerce,
Report, April 27, 2007, 3.
3-72