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

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While noting that the tariff phaseouts for corn starch and modified starch last several years, the CRA is pleased that the United States was able to obtain country-specific TRQs or safeguards that will facilitate the export of U.S. corn starch, dextrin, and modified starches to Korea. Despite the relatively modest amounts of duty-free access provided in the TRQs for corn and modified starch, the CRA expects that higher-value specialty starches for the food, pharmaceutical, and paper industries will fill these TRQs. It estimates the value of this new market access at approximately $50 million. Emergency Committee for American Trade 34 In a written submission to the Commission, the Emergency Committee for American Trade (ECAT) stated that it is an association of chief executives of leading U.S. business enterprises with global operations. ECAT said that its members represent the major agricultural, financial, high technology, manufacturing, merchandising, processing, publishing, and services sectors of the U.S. economy. ECAT noted that its member companies are “strong supporters of negotiations to eliminate tariffs, remove nontariff barriers and promote trade liberalization and investment worldwide.” According to ECAT, the FTA includes “strong provisions on protection for U.S. investment in Korea, strong provisions promoting improved U.S. access to Korea’s market for agriculture, manufactured goods, and services through the elimination of tariff and nontariff barriers to U.S. exports and U.S. investment to Korea, strong protections of U.S. intellectual property rights, and strong provisions promoting greater transparency in the Korean market.” ECAT noted, however, that the U.S.-Korea FTA does not address all the issues sought by their association and urged that the United States continue efforts to ensure that market access barriers in Korea are addressed quickly. ECAT said that the investment chapter in the FTA contains “strong protections to guarantee fair and equitable treatment; national treatment and most-favored nation treatment; prompt, adequate, and effective compensation for direct and indirect expropriations; the free movement of capital; and restrictions on performance requirements.” ECAT added, however, it was disappointed that the investment chapter does not extend the investor-state procedure to financial institutions for national treatment claims. With regard to the market access provisions, the elimination of tariffs will have a positive impact on U.S. exports; that it is critical to ensure that Korea reestablishes and provides access to U.S. beef; that it supports intensive U.S. Government efforts to ensure that Korea barriers to U.S. automotive trade are eliminated quickly; and that the FTA will promote greater access for U.S. innovative pharmaceutical products in the Korean market through increasing transparency and strong intellectual property protections agreed to by Korea. With regard to textiles and apparel, the FTA provides duty-free access under a yarn-forward rule only for textiles and apparel made from U.S. or Korean yarn and fabric, and said that the provision is of limited usefulness to U.S. apparel companies because of its restrictive nature. With regard to services, certain provisions will provide substantial new economic opportunities to some of the most competitive U.S. industries. The FTA would permit greater expansion, competition, and business opportunities for all insurance providers, provide greater market access for U.S. banking and securities firms through investment and cross- 34 Emergency Committee for American Trade, written submission, June 27, 2007. 7-16
order activity, and facilitate expansion of U.S. information technology opportunities in the Korea market. Finally, the FTA includes strong intellectual property rights, a transparency chapter, and the competition policy chapters. Entertainment Industry Coalition 35 In written and hearing testimony, the Entertainment Industry Coalition (EIC) stated that it is an organization comprised of 27 organizations and their members, including six trade associations representing movies, music, video games, and theater owners, three guilds, and the largest trade union in the entertainment industry. EIC said that it broadly supports the U.S.-Korea FTA, and that the FTA provides important provisions regarding the enforcement of intellectual property rights and open-market access for entertainment goods and services. According to EIC, piracy is the single-largest trade barrier the entertainment industry faces in markets outside of the United States. It noted that the International Intellectual Property Alliance estimated losses to U.S. copyright industries because of piracy in Korea at $659 million in 2005. EIC added that both online piracy, such as peer-to-peer file sharing and physical piracy, such as the illicit “burning” of DVDs, continue to challenge the legitimate audiovisual marketplace in Korea. The U.S.-Korea FTA will effectively address these piracy challenges by implementing highstandard copyright protections for digital and nondigital products. Under the FTA’s intellectual property rights provisions Korea would criminalize end-user piracy, shut down Internet sites that permit the unauthorized downloading of copyrighted works, and incorporate World Intellectual Property Organization (WIPO) Copyright Treaty and WIPO Performances and Phonograms Treaty obligations. The agreement will improve market access for U.S. firms by minimizing or locking in most broadcasting, cable, and theatrical quotas at the least-restrictive levels allowed under current Korean law. The EIC noted that (1) the agreement decreases the domestic content quota on the broadcast of animation programs and films, and increases the quota applicable to singlecountry sources of foreign-content broadcast in Korea; (2) Korea has committed to phase in 100 percent foreign ownership of selected program providers; and (3) Korea will allow U.S. investment in Internet-protocol television (IPTV). The EIC noted, however, it had some concerns with several of the reservations Korea made in the FTA with regard to new services and delivery platforms such as video-on-demand and broadcasting via the Internet. Nonetheless, the U.S.-Korea FTA is a “high-standard” agreement that should be widely supported. 35 Motion Picture Association of America (MPAA), on behalf of the Entertainment Industry Coalition (EIC), written submission, June 6, 2007; and Greg Frazier, executive vice president, Motion Picture Association of America (MPAA), testimony before the U.S. International Trade Commission, June 20, 2007. 7-17
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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
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Box 6.1 Foreign investment in Korea
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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 and 246: Korea’s establishment as a region
Page 247: The California Table Grape Commissi
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
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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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