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

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effectively address “Korea’s efforts to use automotive safety, emissions, and other technical standards as a tool to discriminate against imported auto products.” 79 The Industry Trade Advisory Committee on Standards and Technical Barriers to Trade (ITAC 16), which represents a wide range of U.S. industries, stated in its report that the TBT chapter of the FTA contains several important improvements over previously negotiated FTAs with regard to transparency in the development of standards, technical regulations, national treatment, and conformity assessment procedures. 80 The ITAC 16 report stated, however, that it continues to have serious concerns regarding Korea’s effective implementation of the chapter provisions. To address such concerns, the Committee said it would like to see the text of the TBT chapter changed, or the Korean government offer a side letter or operational guidelines, to ensure implementation of the chapter as intended. 81 In its report, the Advisory Committee for Trade Policy and Negotiations recommended that a special U.S. government and private sector group be set up to monitor closely the operation of the TBT chapter. 82 Finally, the Industry Trade Advisory Committee on Consumer Goods (ITAC 4) said that the TBT provisions should help U.S. exporters better compete in Korea. 83 U.S. automakers remain concerned that Korean commitments with regard to NTMs in the FTA may be broken as they assert has happened under past agreements. 84 In views attached to the ITAC 2 (Automotive Equipment and Capital Goods) report, Ford Motor Company said that while some progress was achieved with respect to existing nontariff barriers, it is disappointed that the burden of proving the existence of TBTs and to demonstrate injury before an appropriate remedy is applied continues to be borne by U.S. exporters. 85 Ford also said that it was disappointed that Korea “continues to complicate the auto certification process by mixing U.S. and European safety and emissions requirements.” 86 On the other hand, in its views attached to the ITAC 2 report, General Motors reported that because the negotiated Korean emissions standards are sufficiently harmonized with California standards, U.S. automobile manufacturers should be able to export vehicles to Korea without further modification. 87 General Motors also said that a duty “snapback” provision that would allow the U.S. MFN passenger car tariff to be reimposed on Korea if the dispute settlement panel determines there has been nullification and impairment of expected benefits of the FTA should discourage the creation of new technical barriers or reinstatement of old ones. 88 79 Biegun, testimony before the USITC, June 20, 2007, 219. 80 ITAC (16) on Standards and Technical Trade Barriers, Advisory Committee Report, April 25, 2007, 1–5. 81 Ibid. 82 ACTPN, Report, April 26, 2007, 7. 83 ITAC (4) on Consumer Goods, Report, April 26, 2007, 4. 84 Klingner and Kim, “The U.S.-South Korea FTA,” April 2, 2007, 1–2. 85 ITAC (2) on Automotive Equipment and Capital Goods, Advisory Committee Report, April 27, 2007, 7–9. 86 Ibid., 10. 87 Ibid. 88 Ibid., 13. 5-12
FTA Chapter 15–Electronic Commerce Assessment The U.S.-Korea FTA is likely to facilitate electronic commerce (e-commerce) activity between the two countries, as well as trade in the goods and services that enable e-commerce. U.S. suppliers of information and communication technology (ICT) products, which have a competitive advantage in the Korean marketplace in terms of technology and price, are the most likely to benefit from the FTA. 89 Despite the steady progress of e-commerce in Korea, however, current laws and regulations continue to limit the growth of e-commerce. 90 E-commerce is well established in Korea, and the country has the prerequisites in place to continue to foster a thriving e-commerce market. In particular, Korea has a relatively advanced IT infrastructure and one of the most comprehensive policy frameworks for e-commerce in Asia. The Korean framework includes provisions to support e-commerce projects at small and medium-sized companies (SMEs), which have not embraced ecommerce to the degree that larger firms have. 91 In addition, PC usage and Internet access rates in Korea are high, with Korea leading the Asia Pacific region in terms of broadband usage. 92 Broadband has proliferated in Korea due, in part, to competition within the local-call telecommunications market, the large number of Korean Internet cafes, and the country’s high-density demographics. In 2003, the e-commerce market in Korea totaled $205.0 billion, with business-to-business (B2B) transactions accounting for 88 percent of the market’s total, business-to-consumer (B2C) accounting for 2.6 percent, and business-to-government accounting for 9.2 percent. 93 While B2B has emerged as the predominant type of e-commerce activity in Korea, the growth of B2C has been the strongest in recent years. 94 For example, in 2005, approximately 3,440 B2C cyber shopping malls were operational in Korea, with estimated sales of $7.8 billion. 95 Acknowledging the strength of B2C commerce in the Korean market, the U.S.-Korea FTA contains specific provisions designed to facilitate consumer access to the Internet for commercial transactions, as well as to protect consumers against fraudulent commercial practices. Growth within the B2C sector of the Korean e-commerce market is expected to continue, as traditional businesses and “dotcom” operations combine to form strategic alliances. At present, however, e-commerce implementation by the business sector as a new engine for 89 Market entry and growth strategies commonly employed by foreign suppliers of ICT products and services in Korea include joint ventures and licensing arrangements. USDOC, ITA, Office of Technology and Electronic Commerce, “Korea Internet E-Commerce Toolbox FAQ.” 90 MOCIE, Republic of Korea, “E-Business in Korea,” October 14, 2004. 91 MOCIE, Republic of Korea, “E-commerce in Korea,” September 6, 2002. 92 Currently, Internet access in Korea is provided solely through broadband services. Tan, “South Korea Holds Broadband Lessons”; and Information Technology Assoc. of America, “E-Data Telecommunications: New eMarketer Report Projects 90 Million Broadband Households Worldwide by 2004,” May 2001. 93 MOCIE, Republic of Korea, “E-Business in Korea,” October 14, 2004. By contrast, in the United States, B2B transactions comprise 93 percent of the country’s total e-commerce transactions. UNCTAD, “Chapter 1: Recent Internet trends: Access, Usage and Business Applications,” 2003. 94 KIEC, Republic of Korea, “Korea e-Commerce: Infrastructure.” 95 USDOC, ITA, Office of Technology and Electronic Commerce, “Korea Internet E-Commerce Toolbox FAQ.” 5-13
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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
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Table 3.16 Korean passenger vehicle
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import activities have continued
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Box 3.4 Automotive-related FTA Prov
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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 and 180: Views of Interested Parties In its
Page 181 and 182: Summary of Provisions This chapter
Page 183 and 184: use of TBTs to protect Korea’s au
Page 185: conformity assessment procedures el
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
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Page 208 and 209: FTA Chapter 17—Government Procure
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Page 214 and 215: Box 6.2 Recent conditions of IPR pr
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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
Page 230 and 231: Views of Interested Parties The Ind
Page 233 and 234: CHAPTER 7 Literature Review and Sum
Page 235 and 236: 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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