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

services as a substantial improvement over Korea’s GATS commitments or its offered
commitments under the Doha Round. 18
In its report, the Industry Trade Advisory Committee on Services and Finance Industries
(ITAC 10) stated that the FTA will provide a favorable environment for cross-border
services trade, opening many previously closed Korean sectors to U.S. services suppliers and
investors. 19 The ITAC 10 report supports provisions that allow the U.S. to benefit from any
trade concessions made to other countries with which Korea may negotiate FTAs and the
strategic implications of the FTA on U.S. economic relations with other countries in the
region. 20 On an industry-specific basis, the ITAC 10 report states that the FTA chapters on
investment, government procurement, cross-border trade in services, and regulatory
transparency provide a framework that can increase opportunities in Korea for U.S. energy
services firms, despite the lack of domestic energy reserves and the stalling of privatization
plans in the Korean gas distribution and electricity sectors. 21
The Industry Trade Advisory Committee on Distribution Services for Trade Policy Matters
(ITAC 5) said in its report that the FTA would generate new opportunities for U.S.
distribution firms, but would continue to be hampered by tariff and nontariff barriers
imposed on goods imported from their global supply networks. 22
In particular, an industry representative stated that she is encouraged by the potential for
substantial increases in U.S. cross-border exports and affiliate sales given the large size of
Korea’s economy and the relatively restricted nature of the Korean services sectors prior to
the agreement. 23 An additional industry source said that Korea currently maintains an
“intrusive and nontransparent regulatory regime.” 24 This situation is of particular concern to
services industries, which tend to be heavily regulated. The FTA seeks to address these
concerns by providing for a more transparent regulatory system. The express delivery
industry expressed support for the FTA at the Commissions’s public hearing. 25 The industry
representative said that, although the industry has de facto market access rights, the FTA
would provide legally enforceable market access and national treatment rights. He also noted
that the FTA would provide a 4-hour customs clearing target, which he said would be
superior to the 6-hour customs clearing target included in previous FTAs.
18 Goyer, testimony before the USITC, June 20, 2007. Goyer represented the U.S. Coalition of Service
Industries, an advocacy organization representing the interests of approximately 40 large services firms.
19 ITAC (10) on Services and Finance Industries, Advisory Committee Report, April 25, 2007. ITAC 10
represents approximately 30 service providers.
20 Ibid.
21 Ibid.
22 ITAC (5) on Distribution Services for Trade Policy Matters, Advisory Committee Report,
April 25, 2007.
23 U.S. industry representative, telephone interview by Commission staff, May 31, 2007.
24 Reis, testimony before the USITC, June 20, 2007. Reis represented the U.S.-Korea Business Council
and the U.S. Chamber of Commerce.
25 Min, testimony before the USITC, June 20, 2007. Min represented the Express Delivery and Logistics
Association.
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