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

and said that these investments, which have created thousands of new jobs and benefits for
U.S. workers, exemplify highly successful economic cooperation in this sector. In
conclusion, Ambassador Lee stated that the FTA will provide momentum to increase growth
in the U.S. automobile industry in the near future. 505
Medical Devices 506
Assessment
The U.S.-Korea FTA would likely result in increased exports of medical devices to Korea
by reducing or eliminating a number of tariff and NTMs. U.S. exporters would benefit from
the immediate or phased elimination of tariffs, improved transparency in the reimbursement
process, less complex regulatory approval policies, and measures to counter unethical
practices in the medical device and pharmaceutical sectors.
Korea is an important market for U.S. exporters of medical technology, with U.S. firms
accounting for over $600 million, or approximately one-third of Korea’s imported medical
devices, in 2006. 507 The $2.5 billion market for medical devices in Korea is forecast to grow
at an annual rate of 10–15 percent over the next several years, “driven by improved health
insurance for South Koreans, an aging population, and funding for new equipment to
improve the country’s medical infrastructure.” 508 With continued economic growth, Korea
is expected to demand an even higher level of health care, 509 which could generate greater
export opportunities for U.S. medical device manufacturers. 510 By addressing the tariff and
nontariff issues affecting the sales and trade of medical devices, the U.S.-Korea FTA should
enable U.S. manufacturers of such products to benefit from these export opportunities.
The FTA would eliminate remaining tariffs for U.S. medical device exports—immediately
for most products or phased in within 3 years for other products. Tariff reductions for a few
selected products, however, such as medical magnetic resonance imaging apparatus and
ultrasonic scanning apparatus, would be phased in over 10 years. Unlike the United States,
Korea was not a party to the Uruguay Round “zero-for-zero” tariff elimination initiative for
medical devices; 511 thus Korea maintains tariffs ranging from 6.5 to 13 percent in important
export categories for U.S. medical device manufacturers. These categories include a broad
range of products such as general hospital supplies; intraocular lenses and other ophthalmic
505 Ambassador Lee, testimony before the USITC, June 20, 2007, 9–23.
506 The products covered in this assessment represent approximately 7 percent of U.S. exports to Korea in
the GTAP “machinery and equipment n.e.c.” sector and less than 2 percent of three other GTAP sectors, and
represent approximately 4 percent of U.S. imports from Korea in the GTAP “machinery and equipment
n.e.c.” sector and less than 1 percent of three other GTAP sectors, for 2006.
507 Espicom Business Intelligence, “The Medical Device Market: Korea,” November 30, 2006, 1; and
official statistics of the U.S. Department of Commerce.
508 Diller, “Healthcare: Products and Supplies: Asia,” March 2007, 11; Gross and Minot, “Medical Device
Registration in Korea: An Overview,” January 2007, 1; and USFCS, “Medical Equipment and Devices,” 53.
509 USDOC, “Mission Statement: U.S. Healthcare Technologies Trade Mission: Taiwan, Korea and The
Philippines,” 1–4; and USFCS, “Doing Business in Korea: A Country Commercial Guide for U.S.
Companies,” 2006.
510 Business Wire, “Medical Devices Market in South Korea is Favourable,” 1–2.
511 The FTA tariff provision is consistent with U.S. objectives in the Doha Development Agenda to have
all WTO members eliminate tariffs on health-care products. Current signatories to the Uruguay Round “zerofor-zero”
initiative for medical devices include the United States, Japan, the EU, Iceland, Liechtenstein,
Norway, Switzerland, Canada, and Singapore. Trade Reports International Group, “Eliminating Medical
Tariffs,” February 27, 2007, 1–2.
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