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

More documents

Recommendations

Info

Effects in the Commission’s analysis for a fully implemented FTA are broadly consistent with, though generally lower than, effects identified in other studies employing a similar model and scenario assumptions. The main difference is that the Commission’s analysis is based on the negotiated FTA rather than a proposed or hypothetical FTA, and so may incorporate smaller changes in Korean and U.S. barriers than in other studies. In addition, the Commission’s analysis employs an updated baseline that reflects more recent trade data than the 2001 GTAP baseline; for example, lower U.S. imports of Korean textiles and apparel in the Commission baseline are reflected in lower estimated increases in imports of these products after liberalization, and hence lower increases in overall imports from Korea than in other studies. All of the studies discussed in this review incorporated GTAP-based estimates of protection. This has important implications for estimates of welfare, trade, and output changes, because the GTAP database does not include nontariff barriers in most sectors. 3 Thus, there are large sectors of the economy, particularly services, for which GTAP has no estimates of the magnitude of trade barriers. The current study addresses this lack of services data by providing qualitative assessments of the impact of the FTA on the U.S. services sectors, as well as estimating the reduction in tariff equivalents in the banking sector that would result from the FTA. 4 In two studies, researchers used additional sources to estimate ad valorem equivalents of U.S. and Korean services-sector barriers. These studies estimated larger welfare gains because of larger two-way trade in service sectors, but reported that removal of these barriers would have little effect on service-sector output. Aggregate Welfare and Bilateral Trade There have been four GTAP-based studies of the FTA that do not examine service liberalization. All of these studies have estimated that liberalization of agricultural and manufacturing sectors would raise U.S. welfare by less than 0.3 percent (table 7.1). 5 The liberalization scenarios in Choi and Schott, USITC, and DeRosa and Gilbert included complete elimination of all agricultural and manufacturing tariffs. 6 Choi and Schott estimated that U.S. welfare would increase by 0.13 percent. The USITC did not report welfare changes, but estimated that U.S. GDP would increase by 0.23 percent. DeRosa and Gilbert estimated that U.S. welfare would rise by 0.03 percent. Zhuang and Koo analyzed a 50 percent reduction in agricultural and food barriers and a complete removal of all other tariffs and export taxes. 7 They also assumed that U.S. and Korean productivity in high-tech sectors would increase by 1 percent as a result of the FTA, and estimated that this combined liberalization and productivity gain would raise U.S. welfare by 0.24 percent. 3 The GTAP database also does not explicitly include data on the prevalence or costs and benefits of rules on origin. The reduction of preferential tariff rates to zero implicitly assumes that all traded goods qualify under FTA rules of origin. 4 The banking-sector tariff equivalents developed by the Commission include measures affecting commercial presence, which is not captured by the GTAP model. Therefore, the banking-sector tariff equivalents have not been included in the Commission’s GTAP-based estimations. 5 Welfare increases are given as a percentage of GDP. Welfare gains are often reported in dollar terms as well, but comparison across studies in dollar terms is less informative because the base years of studies differ. 6 Choi and Schott, “Free Trade Between Korea and the United States?” April 2001, 56; USITC, U.S.-Korea FTA: The Economic Impact of Establishing a Free Trade Agreement (FTA) Between the United States and the Republic of Korea, 2001, 5–14; and DeRosa and Gilbert, “Technical Appendix,” 2004, 394. 7 Zhuang and Koo, “Implications of the Korea-U.S. Free Trade Agreement,” 23. 7-2
7-3 Table 7.1 Model, liberalization experiment, and aggregate results: Selected economic literature on a U.S.-Korea FTA Author, year Model a Database, Type of liberalization experiment base year b Change in welfare Change in U.S. Change in U.S. (percent of GDP) exports to Korea imports from Korea (percent) (percent) USITC, 2001 GTAP GTAP-4, 1995 All tariffs 0.23 c 54.0 21.4 Choi and GTAP GTAP-4, 1995 All tariffs 0.13 49.4 30.3 Schott, 2001 Only manufacturing tariffs 0.06 25.5 23.3 DeRosa and Gilbert, 2004 GTAP GTAP-5, 1997 All tariffs 0.03 48.2 23.4 Lee and Lee, GTAP GTAP-6, 2001 80% agricultural tariffs, — 2005 100% manufacturing tariffs, and 50% service barriers e 4.1 f 4.5 f Zhuang and GTAP GTAP-6, 2001 50% food and agriculture tariffs, 0.24 33.5 21.2 Koo, 2006 100% manufacturing tariffs, and hi-tech productivity increase Schott, Harrison, GTAP-6, 2001 All tariffs 0.07 — Bradford, and Rutherford, Moll, 2006 and Tarr e — e All tariffs except rice 0.10 — e — e Kiyota and Michigan GTAP-6, 2020 All tariffs and service barriers Stern, 2007 d 0.14 31.3 18.4 Only agricultural tariffs and export subsidies d -0.01 — e — e Only manufacturing tariffs d 0.04 — e — e Only service barriers d 0.11 — e — e USITC, 2007 GTAP GTAP-6, 2008 All tariffs and TRQs in negotiated FTA 0.01–0.02 22.6–25.3 9.9–10.6 Sources: USITC, U.S.-Korea FTA: The Economic Impact of Establishing a Free Trade Agreement (FTA) Between the United States and the Republic of Korea, 2001; Choi and Schott, “Korea-U.S. Free Trade Revisited.” In Free Trade Agreements: U.S. Strategies and Priorities, 2004; DeRosa and Gilbert, “Technical Appendix,” 2004, 383–417; Lee and Lee, “Feasibility and Economic Effects of a Korea-U.S. FTA,” December 30, 2005; Zhuang and Koo, “Implications of the Korea-U.S. Free Trade Agreement,” 2006; Schott, Bradford, and Moll, “Negotiating the Korea-United States Free Trade Agreement,” June 2006; and Kiyota and Stern, “Economic Effects of a Korea-U.S. Free Trade Agreement,” 2007. a The GTAP model employs Armington differentiation and assumes constant returns to scale and perfect competition in all sectors. With Armington differentiation, domestic imports compete against aggregate imports. In the Michigan model, imports from specific countries compete more directly with U.S. products. The Michigan model assumes constant returns and perfect competition in agriculture, but increasing returns and monopolistic competition in all other sectors. The Harrison, Rutherford, and Tarr model employs Armington differentiation. It is capable of employing increasing returns, but Schott, Bradford, and Moll imposed constant returns and perfect competition in all sectors. b All simulations are static in nature. USITC is a static simulation that compares changes in two projected future periods. Choi and Schott and Schott, Bradford, and Moll report long-run static simulations, in which capital stock may change. c USITC reported the change in GDP rather than welfare. d Assumes Doha Round tariff reductions have been implemented prior to U.S.-Korea FTA implementation. e Not reported. f Trade increases based on increased manufacturing trade as a share of total trade; agriculture and services increases not reported.
Page 2 and 3:
U.S. International Trade Commission
Page 4 and 5:
This report was prepared principall
Page 6 and 7:
CONTENTS-Continued Chapter 3. Secto
Page 8 and 9:
CONTENTS—Continued Chapter 5. Imp
Page 10 and 11:
CONTENTS-Continued Chapter 7. Liter
Page 12 and 13:
CONTENTS-Continued Tables—Continu
Page 15 and 16:
Abbreviations and Acronyms 3G third
Page 17 and 18:
Abbreviations and Acronyms—Contin
Page 19:
Abbreviations and Acronyms—Contin
Page 22 and 23:
vehicles) would likely be diverted
Page 24 and 25:
Sector-specific Assessments The U.S
Page 26 and 27:
total increased fish imports from K
Page 28 and 29:
Korea would likely limit the impact
Page 30 and 31:
Intellectual property rights (IPR):
Page 32 and 33:
sector barriers. 5 These merchandis
Page 34 and 35:
Table 1.1 U.S.-Korea FTA: Location
Page 36 and 37:
Table 1.2 Korean tariff rates on im
Page 38 and 39:
Table 1.4 U.S.-Korea FTA: Summary o
Page 40 and 41:
observed GDP for model regions). Th
Page 42 and 43:
Box 2.1 Interpreting the model resu
Page 44 and 45:
Table 2.1 U.S.-Korea FTA: Simulated
Page 46 and 47:
2-8 This page has been updated to r
Page 48 and 49:
Figure 2.2 U.S-Korea FTA: Simulated
Page 50 and 51:
As shown in figure 2.2, the largest
Page 52 and 53:
2-14 This page has been updated to
Page 54 and 55:
Economy-wide Impact of Implementing
Page 56 and 57:
Grain (Wheat, Corn, and Other Feed
Page 58 and 59:
Korea imported 3.8 million mt of wh
Page 60 and 61:
U.S. oilseed product exports to Kor
Page 62 and 63:
Table 3.2 U.S. oilseed product expo
Page 64 and 65:
Table 3.3 Animal feed exports to Ko
Page 66 and 67:
consumed domestically by the U.S. l
Page 68 and 69:
ates. For corn starch, the United S
Page 70 and 71:
quota rates have been effectively e
Page 72 and 73:
Noncitrus Fruit 87 Views of Interes
Page 74 and 75:
3-20 Table 3.9 U.S.-Korea trade and
Page 76 and 77:
Korean grapes are much more costly
Page 78 and 79:
Potato Products 122 Assessment The
Page 80 and 81:
ate is 304 percent ad valorem. 141
Page 82 and 83:
Other Vegetables 162 Assessment The
Page 84 and 85:
U.S. exports of other fresh and pro
Page 86 and 87:
tariff concessions that could accru
Page 88 and 89:
Dairy Products 215 Similarly, the p
Page 90 and 91:
TRQ for food whey, 223 based on cur
Page 92 and 93:
potential changes in trade based so
Page 94 and 95:
Figure Figure 3.1 Korea: Beef and v
Page 96 and 97:
Views of Interested Parties The inc
Page 98 and 99:
are subject to the same food safety
Page 100 and 101:
enefit under the provisions of this
Page 102 and 103:
Box 3.2 Potential price and quantit
Page 104 and 105:
50 percent, while the vegetable jui
Page 106 and 107:
and major supplier, and U.S. tariff
Page 108 and 109:
textiles and apparel through 2005.
Page 110 and 111:
U.S. Exports The impact of the FTA
Page 112 and 113:
passage. NCTO indicated that, even
Page 114 and 115:
In its report, the ITAC on Distribu
Page 116 and 117:
of the U.S. footwear market, with C
Page 118 and 119:
of these producers. 362 RPFMA noted
Page 120 and 121:
prohibit improper inducements by ph
Page 122 and 123:
Machinery, Electronics, and Transpo
Page 124 and 125:
U.S. exports of auto parts would be
Page 126 and 127:
imports from and exports to Korea.
Page 128 and 129:
Passenger Vehicles 433 Assessment U
Page 130 and 131:
Table 3.16 Korean passenger vehicle
Page 132 and 133:
import activities have continued
Page 134 and 135:
Box 3.4 Automotive-related FTA Prov
Page 136 and 137:
access. The FTA affirms the parties
Page 138 and 139:
gaining U.S. market share regardles
Page 140 and 141:
keep the products out.” 492 Mr. B
Page 142 and 143:
these vehicles to Korea. The commit
Page 144 and 145:
Brown expressed concern about the r
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
Page 155 and 156:
services as a substantial improveme
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 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
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: CHAPTER 7 Literature Review and Sum
Page 237 and 238: terms. Much of the increase in U.S.
Page 239 and 240: Liberalization generated small incr
Page 241 and 242: Sander Levin, Member of the U.S. Ho
Page 243 and 244: Regarding footwear and travel goods
Page 245 and 246: Korea’s establishment as a region
Page 247 and 248: The California Table Grape Commissi
Page 249 and 250: order activity, and facilitate expa
Page 251 and 252: At the Commission’s hearing, Mr.
Page 253 and 254: Information Technology Industry Cou
Page 255 and 256: With respect to tariff and nontarif
Page 257 and 258: deterring illegal transshipments. I
Page 259 and 260: PhRMA identified what it views as t
Page 261 and 262: the TIA stated that it supports the
Page 263 and 264: access to the market. The Council a
Page 265 and 266: United States, Spain, Chile, Brazil
Page 267 and 268: Bibliography Advanced Medical Techn
Page 269 and 270: AT&T. “AT&T Reaction to Free Trad
Page 271 and 272: ______. “Korea-U.S. Free Trade Re
Page 273 and 274: ______. “Country Finance: South K
Page 275 and 276: Global Trade Information Services I
Page 277 and 278: International Labor Organization (I
Page 279 and 280: Jones, Laura E. Executive Director.
Page 281 and 282: Lee, Hyunok, and Daniel A. Sumner.
Page 283 and 284: Nam, In-Soo. “Helio's Losses To W
Page 285 and 286:
Powers, Mark. Northwest Horticultur
Page 287 and 288:
Smith, Brad. American Council of Li
Page 289 and 290:
U.S.-Korea Business Council (USKBC)
Page 291 and 292:
______. “Korea, Republic of Oilse
Page 293 and 294:
U.S. International Trade Commission
Page 295 and 296:
Ward, David. American Council on Ed
Page 297:
APPENDIX A Request Letter from USTR
Page 301:
APPENDIX B Federal Register Notices
Page 304 and 305:
pwalker on PROD1PC71 with NOTICES 2
Page 307:
APPENDIX C Hearing Participants
Page 310 and 311:
ORGANIZATION AND WITNESS: PANEL 1 (
Page 313:
APPENDIX D U.S.-Korea FTA: Chapter-
Page 316 and 317:
fees and charges on trade in goods
Page 318 and 319:
determines the tariff classificatio
Page 320 and 321:
The transparency provisions would a
Page 322 and 323:
necessary duties within 1 year of i
Page 324 and 325:
technical regulation or conformity
Page 326 and 327:
procedures), and practices of a par
Page 328 and 329:
aviation, fisheries, or maritime ma
Page 330 and 331:
of standards and criteria and on te
Page 332 and 333:
of the FTA that impose unilateral o
Page 334 and 335:
use of electronic authentication in
Page 336 and 337:
parties’ rights and obligations u
Page 338 and 339:
establishment of Uniform Domain-Nam
Page 340 and 341:
government to take appropriate meas
Page 342 and 343:
environmental laws. 102 In the U.S.
Page 344 and 345:
not limited to, policies on commerc
Page 347 and 348:
Economic indicators 2002 2006 Popul
Page 349 and 350:
Table E.1 Leading U.S. exports to K
Page 351:
APPENDIX F GTAP Model
Page 354 and 355:
Updating the GTAP Database The curr
Page 356 and 357:
Key Assumptions Agency. 4 The price
Page 358 and 359:
Table F.2 U.S.-Korea FTA benchmark
Page 360 and 361:
Measuring the Impacts of the FTA an
Page 363 and 364:
General Effects of Trade Agreements
Page 365:
APPENDIX H Tariff Equivalents in Ko
Page 368 and 369:
Previous Literature The method for
Page 370 and 371:
For the purposes of this report, a
Page 372 and 373:
Table H.1 Tariff equivalents in Kor
Page 375:
APPENDIX I Services Nonconforming M
Page 378 and 379:
Table I.1 U.S.-Korea FTA: Korean se
Page 381:
APPENDIX J Description of Possible
Page 384 and 385:
are in effect import prices, and th
Page 387:
APPENDIX K Overview of Agricultural
Page 390 and 391:
Additionally, although current regu
Page 392:
About This Report The United States
show all

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

Create successful ePaper yourself

Delete template?

Save as template?