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

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particularly in the areas of risk assessment, customs determination review, and document retention. With respect to risk assessment, the Council said that the chapter commitments balance thorough analysis of high-risk transactions with reduced scrutiny for low-risk traders. The Council said that the agreement also establishes a review and appeals process to discuss customs determinations as well as a committee to monitor implementation of the parties’ obligations. 34 The Express Delivery & Logistics Association said that the agreement builds on achievements in earlier FTAs by including provisions to facilitate customs clearance for express carriers that would permit fast, reliable service to their customers. 35 The U.S.-Korea FTA Business Coalition said that the agreement includes “important new commitments on customs administration” and “streamlined customs procedures” that would facilitate trade by implementing measures to speed goods clearance and promote Customs efficiencies. 36 FTA Chapter 8—Sanitary and Phytosanitary Measures Assessment The U.S.-Korea FTA does not contain any commodity-specific sanitary and phytosanitary (SPS) 37 provisions, but does provide for the establishment of a bilateral Standing Committee 38 to address SPS issues. This SPS provision would likely have some small positive effect on U.S. agricultural producers and exporters over the life of the Agreement, given that a number of the Agricultural Technical Advisory Committees (ATACs) expressed concerns about Korea’s implementation of certain SPS measures in the past to restrict fruit and vegetable trade. In particular, in their views on the FTA, some agricultural groups expressed concerns about Korea’s food additive measures and its use of SPS measures in fruit and vegetable trade. Additionally, beef producers expressed their disappointment that the FTA does not require Korea to recognize the equivalence of the food safety inspection system for beef, and to reinstate commercially viable trade in beef and beef products in recognition of the measures the United States has implemented in regard to bovine spongiform encephalopathy (BSE) that are consistent with international standards. 39 As noted in chapter 3, U.S. exports of beef and beef products to Korea have been strictly limited since 2003 due to Korea’s SPS restrictions related to BSE. U.S. agricultural producers are concerned that use of SPS measures that are not based on sound science in bilateral trade with Korea could reduce the likely benefits to their industries from the U.S.-Korea FTA. Two agricultural industries, the poultry and pork industries, indicated that Korea’s willingness to accept poultry and pork from USDA-approved facilities would enhance the trade benefits negotiated for these industries under the FTA. 34 ITI, “U.S.-Korea Free Trade Agreement: Potential Economy-wide and Selected Sectoral Effects,” testimony before the USITC, June 20, 2006. 35 Express Delivery & Logistics Assoc., “Testimony on the U.S.-Korea Free Trade Agreement.” 36 USKFTABC, “Views on the Economic Impact of a United States-Korea Free Trade Agreement,” written submission to the USITC, June 27, 2007. 37 USTR, communication with Commission staff, Washington, DC, June 8, 2007. 38 USTR, “Final - United States - Korea FTA Texts,” 2007, chap. 8. 39 For additional information on the meat sector, see chap. 3 of this report. 5-6
Summary of Provisions This chapter covers the protection of human, animal, or plant life or health in the parties’ territories, insofar as they directly or indirectly affect trade between them, and the enhancement of the World Trade Organization (WTO) Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement). The FTA mandates no changes to either parties SPS rules. The United States and Korea would agree to establish a Committee on Sanitary and Phytosanitary Matters to coordinate administration of the chapter (Article 6.3). The Committee would provide a forum to help each party implement the SPS Agreement, enhance mutual understanding of each government’s SPS measures, resolve future bilateral SPS matters, coordinate technical assistance programs, and consult on issues and positions in the WTO, various codex committees, and in other fora. The chapter specifies that no party has recourse to dispute settlement under the FTA for any matter arising under the chapter. Any SPS issue that may require formal dispute resolution would be resolved through the formal process established under the WTO SPS Agreement. Views of Interested Parties In its report on the agreement, the Agricultural Policy Advisory Committee (APAC) expressed the view that the U.S.-Korea FTA will benefit U.S. farmers and ranchers by increasing export opportunities through the elimination of tariff and nontariff barriers. The report said, however, that the benefits will occur for the beef industry only if meaningful science-based trade is fully restored prior to the approval of the FTA. The report identified three key issues that must be addressed for beef: beef plant inspection equivalency, Korean import certification language, and Korea’s recognition of USDA Process Verified Programs (PVPs) as approved by the Agricultural Marketing Service. 40 The National Cattlemen’s Beef Association (NCBA), in a written submission to the Commission, said that all of Korea’s bans on U.S. beef products must be lifted by the time the agreement is sent to Congress or it will not support the FTA. The NCBA said that SPS and plant equivalency precedents established in recently negotiated FTAs are the only way to assure real access to the South Korean market. 41 In its report on the FTA, the Animals and Animal Products Agricultural Trade Advisory Committee (ATAC) indicated that the beef industry will withhold support for the U.S.-Korea FTA until commercially viable beef trade occurs based on international recognized guidelines established by the World Organization for Animal Health (OIE). 42 The report said, however, that the U.S. poultry industry supports the FTA. The report noted a separate bilateral agreement under which Korea agreed to recognize the equivalency of the U.S. food safety inspection system for poultry and to take measures to minimize poultry trade disruptions with respect to avian influenza. 43 According to the report, the poultry industry is of the view that these measures, combined with the tariff provisions of the U.S.-Korea FTA, will result in enhanced U.S.-Korea poultry trade. 40 APAC for Trade, Agricultural Policy Advisory Committee for Trade Report, April 27, 2007, 2–3. 41 NCBA, “Comments on the United States-South Korea Free Trade Agreement,” written submission to USITC, April 27, 2006, 3. 42 ATAC for Animal and Animal Products, Advisory Committee Report, April 26, 2007, 1. 43 Ibid., 4. 5-7
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U.S. International Trade Commission
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This report was prepared principall
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CONTENTS-Continued Chapter 3. Secto
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CONTENTS—Continued Chapter 5. Imp
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CONTENTS-Continued Chapter 7. Liter
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CONTENTS-Continued Tables—Continu
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Abbreviations and Acronyms 3G third
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Abbreviations and Acronyms—Contin
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Abbreviations and Acronyms—Contin
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vehicles) would likely be diverted
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Sector-specific Assessments The U.S
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total increased fish imports from K
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Korea would likely limit the impact
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Intellectual property rights (IPR):
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sector barriers. 5 These merchandis
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Table 1.1 U.S.-Korea FTA: Location
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Table 1.2 Korean tariff rates on im
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Table 1.4 U.S.-Korea FTA: Summary o
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observed GDP for model regions). Th
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Box 2.1 Interpreting the model resu
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Table 2.1 U.S.-Korea FTA: Simulated
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2-8 This page has been updated to r
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Figure 2.2 U.S-Korea FTA: Simulated
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As shown in figure 2.2, the largest
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2-14 This page has been updated to
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Economy-wide Impact of Implementing
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Grain (Wheat, Corn, and Other Feed
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Korea imported 3.8 million mt of wh
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U.S. oilseed product exports to Kor
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Table 3.2 U.S. oilseed product expo
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Table 3.3 Animal feed exports to Ko
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consumed domestically by the U.S. l
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ates. For corn starch, the United S
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quota rates have been effectively e
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Noncitrus Fruit 87 Views of Interes
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3-20 Table 3.9 U.S.-Korea trade and
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Korean grapes are much more costly
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Potato Products 122 Assessment The
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ate is 304 percent ad valorem. 141
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Other Vegetables 162 Assessment The
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U.S. exports of other fresh and pro
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tariff concessions that could accru
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Dairy Products 215 Similarly, the p
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TRQ for food whey, 223 based on cur
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potential changes in trade based so
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Figure Figure 3.1 Korea: Beef and v
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Views of Interested Parties The inc
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are subject to the same food safety
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enefit under the provisions of this
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Box 3.2 Potential price and quantit
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50 percent, while the vegetable jui
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and major supplier, and U.S. tariff
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textiles and apparel through 2005.
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U.S. Exports The impact of the FTA
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passage. NCTO indicated that, even
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In its report, the ITAC on Distribu
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of the U.S. footwear market, with C
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of these producers. 362 RPFMA noted
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prohibit improper inducements by ph
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Machinery, Electronics, and Transpo
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U.S. exports of auto parts would be
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imports from and exports to Korea.
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Passenger Vehicles 433 Assessment U
Page 130 and 131: Table 3.16 Korean passenger vehicle
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Page 134 and 135: Box 3.4 Automotive-related FTA Prov
Page 136 and 137: access. The FTA affirms the parties
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Page 140 and 141: keep the products out.” 492 Mr. B
Page 142 and 143: these vehicles to Korea. The commit
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Page 146 and 147: goods; and high-technology medical,
Page 148 and 149: device pricing, reimbursement, and
Page 151 and 152: CHAPTER 4 Impact of Market Access P
Page 153 and 154: elative to GDP than do China, Japan
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Page 157 and 158: Box 4.2 Financial services: Competi
Page 159 and 160: Summary of Provisions Chapter 13 of
Page 161 and 162: national treatment, full establishm
Page 163 and 164: Box 4.4 Competitive conditions in t
Page 165 and 166: and cross-connect links 70 are more
Page 167 and 168: Box 4.5 U.S. legal services trade w
Page 169 and 170: establish offices in Korea to provi
Page 171 and 172: Box 4.6 Competitive conditions in t
Page 173 and 174: equirements and foreign ownership r
Page 175 and 176: CHAPTER 5 Impact of Trade Facilitat
Page 177 and 178: publication and administration of t
Page 179: Views of Interested Parties In its
Page 183 and 184: use of TBTs to protect Korea’s au
Page 185 and 186: conformity assessment procedures el
Page 187 and 188: FTA Chapter 15-Electronic Commerce
Page 189: Views of Interested Parties The U.S
Page 192 and 193: quantities as to be a substantial c
Page 194 and 195: that such transshipment could imped
Page 196 and 197: Box 6.1 Foreign investment in Korea
Page 198 and 199: in the FTA. The awards made by any
Page 200 and 201: Table 6.1 U.S.-Korea FTA: Industry
Page 202 and 203: (ITAC 5) report cited as particular
Page 204 and 205: Section C of Chapter 11 and the lac
Page 206 and 207: practices, and violations of consum
Page 208 and 209: FTA Chapter 17—Government Procure
Page 210 and 211: Both the United States and Korea ar
Page 212 and 213: 8) 87 also expressed support for th
Page 214 and 215: Box 6.2 Recent conditions of IPR pr
Page 216 and 217: protection to life of the author pl
Page 218 and 219: Views of Interested Parties A numbe
Page 220 and 221: GPHA stated in testimony before the
Page 222 and 223: Box 6.3 Labor market conditions in
Page 224 and 225: FTA Chapter 20—Environment 131 As
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Page 228 and 229: FTA Chapter 22-Institutional Provis
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Views of Interested Parties The Ind
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CHAPTER 7 Literature Review and Sum
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7-3 Table 7.1 Model, liberalization
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terms. Much of the increase in U.S.
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Liberalization generated small incr
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Sander Levin, Member of the U.S. Ho
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Regarding footwear and travel goods
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Korea’s establishment as a region
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The California Table Grape Commissi
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order activity, and facilitate expa
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At the Commission’s hearing, Mr.
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Information Technology Industry Cou
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With respect to tariff and nontarif
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deterring illegal transshipments. I
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PhRMA identified what it views as t
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the TIA stated that it supports the
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access to the market. The Council a
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United States, Spain, Chile, Brazil
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Bibliography Advanced Medical Techn
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AT&T. “AT&T Reaction to Free Trad
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______. “Korea-U.S. Free Trade Re
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______. “Country Finance: South K
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Global Trade Information Services I
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International Labor Organization (I
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Jones, Laura E. Executive Director.
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Lee, Hyunok, and Daniel A. Sumner.
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Nam, In-Soo. “Helio's Losses To W
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Powers, Mark. Northwest Horticultur
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Smith, Brad. American Council of Li
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U.S.-Korea Business Council (USKBC)
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______. “Korea, Republic of Oilse
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U.S. International Trade Commission
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Ward, David. American Council on Ed
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APPENDIX A Request Letter from USTR
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APPENDIX B Federal Register Notices
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pwalker on PROD1PC71 with NOTICES 2
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APPENDIX C Hearing Participants
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ORGANIZATION AND WITNESS: PANEL 1 (
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APPENDIX D U.S.-Korea FTA: Chapter-
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fees and charges on trade in goods
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determines the tariff classificatio
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The transparency provisions would a
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necessary duties within 1 year of i
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technical regulation or conformity
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procedures), and practices of a par
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aviation, fisheries, or maritime ma
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of standards and criteria and on te
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of the FTA that impose unilateral o
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use of electronic authentication in
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parties’ rights and obligations u
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establishment of Uniform Domain-Nam
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government to take appropriate meas
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environmental laws. 102 In the U.S.
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not limited to, policies on commerc
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Economic indicators 2002 2006 Popul
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Table E.1 Leading U.S. exports to K
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APPENDIX F GTAP Model
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Updating the GTAP Database The curr
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Key Assumptions Agency. 4 The price
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Table F.2 U.S.-Korea FTA benchmark
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Measuring the Impacts of the FTA an
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General Effects of Trade Agreements
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APPENDIX H Tariff Equivalents in Ko
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Previous Literature The method for
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For the purposes of this report, a
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Table H.1 Tariff equivalents in Kor
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APPENDIX I Services Nonconforming M
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Table I.1 U.S.-Korea FTA: Korean se
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APPENDIX J Description of Possible
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are in effect import prices, and th
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APPENDIX K Overview of Agricultural
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Additionally, although current regu
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About This Report The United States
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