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

free imports of competing foreign-produced watches following completion of multilateral
tariff negotiations. He said that the Government of the Virgin Islands would withdraw its
opposition to the FTA if the FTA either excludes watches or includes safeguards comparable
to the “hold harmless” mechanism approved by Congress to protect the Virgin Islands in the
event of worldwide watch tariff reductions.
Aerospace Industries Association of America, Inc. 22
In a written submission to the Commission, the Aerospace Industries Association of
America, Inc. (AIA) stated that it is the principal U.S. trade association representing the
nation’s major aerospace and defense manufacturers. AIA’s submission supported
Congressional approval of the U.S.-Korea FTA and stated that the FTA, if ratified, could
make Korea the United States’ largest FTA trading partner in 15 years of such negotiations.
It sees almost 95 percent of all bilateral trade becoming duty-free within 3 years of
implementation, with most of the remaining items becoming duty-free within 10 years. The
agreement will eliminate tariffs and trade barriers, promote economic growth, enhance
intellectual property rights, and strengthen economic ties between the two nations. In
addition, the FTA would also underscore U.S. commitment to U.S. East Asian allies.
American Apparel & Footwear Association 23
In a written submission to the Commission, the American Apparel & Footwear Association
(AAFA), a national association representing apparel and footwear companies and their
suppliers, stated that it supports passage of the FTA. AAFA expressed concern, however,
that the “restrictive and cumbersome” rules of origin and “less-than-ambitious” tariff
phaseout schedule for textiles and apparel would provide little incentive to further develop
trade with Korea in textiles and apparel. It noted that “well over one-half” of current U.S.-
Korea apparel and textile trade would receive less than immediate and reciprocal duty-free
treatment.
AAFA expressed concern about the FTA short-supply provision, noting that, while the FTA
appears to adopt a more CAFTA-DR-friendly short-supply process, it has yet to designate
any fibers, yarns, or fabrics as not commercially available in the FTA region or to include
items already designated in short supply under other U.S. trade programs. The association
also noted that the FTA would place quantitative limits on the volume of fabrics and apparel
made of short-supply inputs that would be eligible for FTA preferences. According to
AAFA, the absence of “cumulation” provisions that permit integration of inputs among U.S.
FTA partners would limit opportunities to create new markets for U.S. textile and apparel
exports that flow through FTA partners (such as garments made in Guatemala with U.S.
fabric exported to Korea). It views the apparel and textile provisions in CAFTA-DR as a
model that would have worked well in the U.S.-Korea FTA because the CAFTA-DR
provisions are designed to create export opportunities for U.S. textile firms and provide the
region the tools it needs to effectively compete, including cumulation, a “robust” shortsupply
list, a single transformation rule of origin for key goods, and immediate and
reciprocal duty-free entry for all apparel and textiles.
22 Aerospace Industries Association of America, Inc., written submission, June 20, 2007.
23 American Apparel & Footwear Association, written submission, June 27, 2007.
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