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

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frozen french fries account for an 80-percent share of the Korean french-fry market already, and said that the immediate elimination of the 18-percent duty would allow for a significant expansion of product to that market. According to APTA, the quota on dehydrated potatoes is small and, together with the snapback tariff of 304 percent, impedes further shipments of these products to Korea. U.S. firms have entered this product under a different tariff classification with a lower duty in recent years, but must first blend this product with other additives for it to be reclassified, which seriously limits its end uses. APTA added that the implementation of the FTA will also allow U.S. product to maintain, and even increase, its market share in the highly competitive and price-sensitive Korean processed-potato market. Bumble Bee Foods, LLC 30 Bumble Bee Foods stated that it is the nation’s largest brand of seafood, with U.S. facilities producing canned tuna, among other foods in its written submission to the Commission. It reported it operates the only remaining tuna cannery in the continental United States (in Santa Fe Springs, CA) and the only remaining tuna cannery in Puerto Rico (in Mayaguez). It stated it is one of three U.S. tuna canners (along with StarKist and Chicken of the Sea, which operate canneries in American Samoa) that together supply more than 85 percent of tuna consumption in the U.S. market, the largest tuna market in the world. Bumble Bee Foods stated that it opposes any reductions in U.S. tariffs on tuna from Korea. It supports the current U.S. duty structure for canned tuna (consisting of an ad valorem tariff for tuna packed in oil and a tariff-rate quota for tuna packed in water). A rise in low-cost imports has led to the demise of the U.S. tuna processing industry (since 1979 at least ten canneries have closed, with a loss of 20,000 jobs). It cannot compete with foreign labor rates as low as $1.75 per hour compared with hourly labor rates of $11.50 and $7.50 in California and Puerto Rico, respectively. Korea, according to Bumble Bee, has tuna canning operations and could easily divert additional shipments to the U.S. market should the proposed U.S.- Korea FTA lead to the elimination of the U.S. tariffs on canned tuna from Korea. Bumble Bee remarked that any terms regarding canned tuna in the proposed agreement should include similar rules of origin as in the Andean Trade Preference Act, where tariff preferences were given only for tuna harvested by Andean and/or U.S.-flag harvesting vessels (thereby offering increased market opportunities for the U.S. tuna fleet, now that most U.S. canneries have closed). The California Table Grape Commission 31 In a written submission to the Commission, the California Table Grape Commission stated that it was established by an act of the state’s legislature in 1967 and currently represents over 500 of California’s fresh-grape growers. The California Table Grape Commission said that its primary activities are focused around research, trade management, issue management, education and promotion. 30 Bumble Bee Foods, LLC, written submission, June 21, 2007. 31 California Table Grape Commission, written submission, June 25, 2007. 7-14
The California Table Grape Commission supports the U.S.-Korea FTA and the respective tariff reductions for grapes. The agreement will allow California’s table grapes to be more competitive in the Korean market with both domestic Korean grapes, which have a similar growing season to California grapes, and Chilean grapes, which already benefit from tariff reductions as a result of the 2004 Chile-South Korea FTA. It added that the agreement will make U.S. growers more competitive with Chinese growers, who also have a similar growing season to California, should they enter the South Korean market. It supports the agreement and sees it as crucial to the competitiveness of California grapes in Korea. Coalition of Services Industries 32 In hearing testimony, the Coalition of Services Industries (CSI), whose members include U.S. services companies and associations across a broad range of service sectors, stated that it seeks the liberalization of trade and investment in services markets worldwide in all negotiating forums. CSI said that it supports the U.S.-Korea FTA, stating that the agreement would provide substantial new trade and investment opportunities, investor protections, regulatory transparency, and other benefits to U.S. services firms. The FTA addresses current impediments to U.S. services trade with Korea and said that the potential commercial significance of the agreement to U.S. services firms is substantial given the large size of the Korean services market. Korea’s services commitments under the FTA are a significant improvement over its GATS commitments or the Doha Round services offer. CSI is particularly encouraged by the agreement’s transparency provisions, which will allow services firms, which tend to be heavily regulated, to comment on proposed regulations prior to their entry into force. The agreement would enhance opportunities for U.S. services firms to participate in government procurement. CSI stated that the agreement’s insurance provisions surpass the level of openness reached in previous agreements, and noted the provisions on telecommunications, which it said will allow U.S. firms to acquire or maintain full equity ownership in telecommunication firms in Korea and ensure the independence of the regulator. Finally, CSI added that the U.S.-Korea FTA has the potential to have positive strategic implications for U.S. trade policy throughout the region. Corn Refiners Association 33 The Corn Refiners Association (CRA) stated that it is a national trade association representing the corn refining (wet milling) industry in the United States in its written submission to the Commission. The CRA said that it fully supports the U.S.-Korea FTA, and said that it will provide expanded and new market access for the U.S. corn refining industry. CRA also noted that Korea committed to phase out most current applied tariffs of 8 percent on refined corn products in 5 to 7 years. CRA noted that tariffs on corn starch and modified starches, which are relatively higher (ranging from 226 to 385.7 percent), will be eliminated over a longer period (12 years for modified starch and dextrin and 15 years for corn starch). 32 John Goyer, vice president, International Trade Negotiations & Investment, Coalition of Service Industries, testimony before the U.S. International Trade Commission, June 20, 2007. 33 Corn Refiners Association, written submission, June 21, 2007. 7-15
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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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gaining U.S. market share regardles
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keep the products out.” 492 Mr. B
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these vehicles to Korea. The commit
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Brown expressed concern about the r
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goods; and high-technology medical,
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device pricing, reimbursement, and
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CHAPTER 4 Impact of Market Access P
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elative to GDP than do China, Japan
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services as a substantial improveme
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Box 4.2 Financial services: Competi
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Summary of Provisions Chapter 13 of
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national treatment, full establishm
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Box 4.4 Competitive conditions in t
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and cross-connect links 70 are more
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Box 4.5 U.S. legal services trade w
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establish offices in Korea to provi
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Box 4.6 Competitive conditions in t
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equirements and foreign ownership r
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CHAPTER 5 Impact of Trade Facilitat
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publication and administration of t
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Views of Interested Parties In its
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Summary of Provisions This chapter
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use of TBTs to protect Korea’s au
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conformity assessment procedures el
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FTA Chapter 15-Electronic Commerce
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Views of Interested Parties The U.S
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quantities as to be a substantial c
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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
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
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: Korea’s establishment as a region
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
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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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