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

shipments, 7 for example, meet or exceed the standards negotiated in other recent agreements,
such as the proposed U.S.-Peru and U.S.-Colombia Trade Promotion Agreements. FTA
chapter 7 would further build on commitments to streamline goods processing and
documentation and would significantly improve on the time frame to provide binding
advance rulings (e.g., on tariff classification).
Commitments in these areas address, in part, U.S. and European government and industry
allegations of inefficient, arbitrary, and/or nontransparent customs regulations, delays in
customs clearance, 8 and arbitrary and discriminatory tariff classifications 9 of imported goods
by the KCS. Industries that have expressed concerns regarding customs administration
procedures include the food processing and branded food, beverage, 10 and consumer
products; 11 consumer electronics; 12 and information technology sectors. 13 Broad-based
groups have also noted their interest in gaining commitments that would expedite Korea’s
clearance process, improve the transparency of its customs valuation process, and improve
its compliance with international harmonized tariff classifications. 14
Summary of Provisions
The Chapter 7 commitments of the U.S.-Korea FTA are largely the same as those negotiated
in recent agreements that the United States has concluded with Peru, Colombia, and the
Dominican Republic and CAFTA countries. 15 The chapter supports many of the General
Agreement on Tariffs and Trade (GATT) goals in the areas of fees and formalities 16 and
7 USTR, “Final - United States - Korea FTA Texts,” 2007, Article 7.7.
8 USTR, 2002 National Trade Estimate Report on Foreign Trade Barriers, March 2002, 262; and USTR,
2004 National Trade Estimate Report on Foreign Trade Barriers, March 2004, 294.
9 The U.S. Government has indicated that the Korean Customs Service has been inconsistent in
classifying “blended products,” such as potato flakes, soybean flakes, and flavored popcorn, and that such
changes in classification “. . . are often based on arbitrary standards and are at odds with practices followed
by OECD members.” USTR, 2006 National Trade Estimate Report on Foreign Trade Barriers, March 2006,
396. European manufacturers reported a similar problem with the reclassification of certain impregnated
papers as plastics products, noting that this type of change “constitutes a breach of Korea’s obligation to the
WTO.” European Commission, Market Access Database.
10 For additional information relating to Customs Administration and agricultural products, see app. K of
this report.
11 The Grocery Manufacturers Association (GMA) and Food Products Association (FPA) identified
concerns with customs clearance delays and nontransparent customs valuation procedures. Grocery
Manufacturers Assoc., “Request for Public Comments,” March 17, 2006; Food Products Assoc., “Request for
Comments Concerning Proposed Free Trade Agreement with Republic of Korea,” March 23, 2006.
12 The Consumer Electronics Association (CEA) has previously cited its support for “a transparent,
efficient and non-discriminatory customs administration regime,” with particular interests in tariff
classification, EDI systems, and customs information dissemination. Consumer Electronics Assoc., “CEA
Comments on a U.S.-Korea FTA,” April 6, 2006.
13 The Information Technology Industry Council (ITI) supported an agreement that provides “a
predictable and standardized Customs environment,” including Internet publication of laws and regulations,
coordination among Customs agencies, and specific arrangements for express shipments. ITI, “ITI
Submission on the United States—Korea Free Trade Agreement,” written submission to the Trade Policy
Staff Committee, Office of the USTR, March 24, 2006.
14 Business Roundtable, “Real Liberalization in the U.S.-Korea FTA,” June 2006, and USKBC and the
AMCHAM in Korea, U.S.-Korea Free Trade Agreement Position Paper, 2006.
15 The implementation language in the U.S.-Korea FTA is stronger than that for recent agreements, in
recognition of the greater capabilities of the Korean Customs Service.
16 See Article VIII of the GATT.
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