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

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growth lags the implementation rate in other industrialized countries, such as Japan and the United States. In 2002, expenditures in B2B e-commerce transactions in Korea reached approximately $130 billion. In Japan and the United States, such expenditures equaled $516 billion and $995 billion (2001 estimate), respectively. Explanations offered by the Korean government include a lack of collaboration among businesses, insufficient investment resources among SMEs, and the absence of a standardized payment system. 96 Creating an environment more favorable to B2B e-commerce will likely require, among other things, offering attractive tax reductions to firms investing in information technology research and development. 97 Summary of Provisions The provisions relating to electronic commerce within the U.S.-Korea FTA are similar to those of previous FTAs. In general, the U.S.-Korea FTA (1) would provide for nondiscriminatory and duty-free treatment of all digital products, whether delivered electronically or in physical form; (2) contains commitments by both parties to facilitate the use of electronic authentication in their respective markets; and (3) includes principles that ensure consumers’ reasonable access to the Internet to conduct electronic commerce. First, under the U.S.-Korea FTA, the parties would commit to nondiscriminatory treatment of digital products and agree not to impose customs duties, fees, or other charges on such products, whether traded in physical form or electronically over the Internet. In addition, the parties would agree not to accord less favorable treatment to some digital products than are accorded to other like products because they were created, stored, transmitted, published, or first made commercially available outside its territory, or because of the nationality of the author, performer, producer, developer, or distributor of such digital products. Second, the U.S.-Korea FTA is aimed at ensuring that the parties accept the validity of electronic authentication and electronic signatures. Neither party, for example, may deny the legality of a signature solely because it is in electronic form. Finally, the U.S.-Korea FTA includes provisions that are intended to promote and maintain online consumer protection, including those that foster cooperation in enforcing laws against fraudulent and deceptive e-commerce practices. The FTA introduces principles not included in previous FTAs that would promote consumer access to the Internet to conduct electronic commerce, and that would emphasize the importance of maintaining unrestricted crossborder information flows. Such principles likely reflect the rapid growth of both business-tobusiness and business-to-consumer electronic commerce in Korea in recent years. 98 96 MOCIE, Republic of Korea, “E-Business Initiative in Korea,” 2001. 97 KIEC, Republic of Korea, “Korea e-Commerce: Overview”; and American Univ., “Management of Global Information Technology, Information Technology Landscape in Korea.” 98 KIEC, Republic of Korea, “Korea e-Commerce: Infrastructure.” 5-14
Views of Interested Parties The U.S. information technology industry supports provisions in the FTA that call for the establishment of guarantees of nondiscrimination, a binding prohibition on customs duties on products delivered electronically, and the creation of a favorable environment for the development of global e-commerce. Several of the ITAC reports addressed provisions in the agreement relating to e-commerce. For example, in its report on the FTA, the Industry Trade Advisory Committee for Information and Communications Technologies, Services and Electronic Commerce (ITAC 8) expressed support for measures that promote the most liberal treatment of e-commerce as is possible and a moratorium on taxes, duties, and other fees pertaining to e-commerce, the Internet, or electronic transmissions of software or other digital products. 99 The Industry Advisory Committee on Intellectual Property Rights (ITAC 15) said that it also supports the measures Korea has proposed or initiated that are likely to simplify and encourage the use of e-commerce, such as higher levels of protection regarding intellectual property rights, which lead to a stronger legal infrastructure for e-commerce, as well as improved market conditions for the distribution and transmission of materials over the Internet. 100 The ITAC 15 report also said that other practices particularly useful to the domestic Korean ecommerce market include fostering consumer confidence in e-commerce and providing greater data privacy protection. Several industry groups also expressed views. For instance, the Information Technology Industry Council, in testimony at the Commission’s hearing, said that it believes that the FTA’s expansion of the number of IT products and services available for duty-free export to Korea, beyond what is required under the WTO Information Technology Agreement, will enable U.S. IT firms to compete more effectively in the Korean market. 101 In addition, the Software and Information Industry Association said that the apparent expansion in market access for services and e-commerce will provide a framework with which businesses can deliver digital products and services around the world. 102 Finally, the Coalition of Services Industries, in testimony before the House Committee on Ways and Means, said that it expects the FTA will have a positive effect on U.S. service providers by guaranteeing that Korea will not undertake any new restrictions that may hamper the growth of e-commerce in the Korean market. 103 99 ITAC (8) for Information and Communications Technologies, Services and Electronic Commerce, Report, April 27, 2007. 100 ITAC (15) on Intellectual Property Rights, Advisory Committee Report, April 27, 2007. 101 Dawson, testimony before the USITC, June 20, 2007, 68. 102 USTR, “Strong Support for the U.S.-Korea (KORUS) Free Trade Agreement,” May 22, 2007. 103 Vastine, testimony before the House Committee on Ways and Means, March 20, 2007. 5-15
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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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access. The FTA affirms the parties
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Page 140 and 141: keep the products out.” 492 Mr. B
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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 and 186: conformity assessment procedures el
Page 187: FTA Chapter 15-Electronic Commerce
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
Page 226 and 227: trade measures are the least disrup
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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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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