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

access across almost all major service sectors; that legal stability would be provided for U.S.
investors operating in Korea; U.S. financial institutions would be able to expand operations
in Korea; the FTA would reinforce Korean government efforts in promoting IPR protection;
the FTA would provide assurances for the U.S. auto industry and ensure that U.S. autos have
a fair opportunity to compete in Korea, and most of the U.S. Congressional proposals for the
automotive sector negotiations were met, except for the setting of numerical targets; and the
creation of a medicines and medical devices working group would allow for continued
dialogue between the U.S. and Korea on policy issues.
Ambassador Lee stated that the FTA is important to Korea because 70 percent of Korea’s
GDP is from trade. Further, he noted that the FTA would make Korea more competitive by
boosting confidence in the Korean economy and stimulating foreign investment in Korea,
helping sustain Korean efforts to reform and open its economy, and helping “Korea to
become a hub for East Asian finance and trade, and a gateway for the U.S. and the rest of the
world to the opportunities East Asia can offer.” For the United States, he said that the FTA
would be the most commercially significant since NAFTA, and noted that the U.S.
government expects the U.S. economy to see an estimated $17–$40 billion dollar benefit
once the FTA is in place. He believes that Korea would become more important as an export
destination for many U.S. states, that many small and medium enterprises would stand to
gain from new opportunities for trade, and that the FTA would become a strategic
springboard for U.S. businesses into many other northeast Asian economies. Ambassador
Lee reported that the big winners of the FTA would be consumers, who would benefit from
greater choices and cheaper prices.
Sherrod Brown, Member of the U.S. Senate from Ohio 18
In a written submission to the Commission, Sherrod Brown, U.S. Senator from Ohio,
expressed concern that the proposed U.S.-Korea FTA would create “unbalanced benefits for
Korean automakers at the expense of U.S. auto workers and manufacturers.” Senator Brown
stated that the agreement, as negotiated, would provide an incentive for auto parts
manufacturers elsewhere to circumvent duties and gain duty-free access to the U.S. market
because the agreement would weaken the domestic content provisions to 35 percent. He
added that the FTA would provide an incentive for foreign auto companies to “locate
production in Korea and use it as a platform to export autos, auto parts, and pickup trucks
duty-free into the U.S.” Senator Brown expressed concern regarding the Government of
Korea’s prediction that the agreement would “prompt a surge in U.S. imports of autos from
Korea to the tune of $1 billion.” He also noted that the agreement, as negotiated, could pose
a serious threat to the auto and auto parts industries. Further, he stated that an alternative way
to address difficulties accessing the Korean consumer market would be through objective
and verifiable benchmarks.
18 Senator Sherrod Brown, written submission, June 20, 2007.
7-8