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

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SIA also said that the U.S.-Korea Free Trade Agreement is important for the U.S. semiconductor industry as a “precursor to further trade-liberalizing initiatives in Asia.” The SIA provided specific comments on five provisions of the agreement: tariffs, trade remedies, intellectual property, competition-related matters, and TBT. Regarding tariffs, the SIA noted that the reason why the agreement does not contain further market access benefits for the semiconductor industry is because these benefits have already been obtained. The SIA added, however, that the agreement does not provide duty-free treatment for “MCPlike” devices. Second, with regard to trade remedies, the agreement would make the use of the antidumping law potentially more difficult, but that access to safeguards is currently not likely a major concern for the semiconductor industry. Changes to trade-remedy rules and processes should be made through the WTO. Third, it appreciates that the agreement addresses comprehensively what it describes as Korea’s lack of effective enforcement mechanisms regarding intellectual property. The SIA noted, however, that the meaning of the term “inequitable conduct” used in the intellectual property chapter of the agreement should be further clarified. Fourth, regarding competition-related matters in chapter 16 of the agreement, many of the provisions will contribute to fairer treatment by the Korean Fair Trade Commission of U.S. firms and that this chapter provides a solid precedent for other Asian countries whose antitrust laws could be applied against foreign investors in a discriminatory way. Finally, the TBT chapter of the agreement is a good model for achieving similar protections through FTAs with other Asian nations with similar issues. Society of the Plastics Industry 54 The Society of the Plastics Industry (SPI) stated in a written submission to the Commission that it represents U.S. companies operating in all segments of the plastics supply chain, including plastics processors and manufacturers of machinery, molds, and raw materials. The SPI stated that it strongly supports the U.S.-Korea FTA. The SPI added that its support of the FTA is based on its 5- to 10-year phaseouts of U.S. tariffs on plastic products that it considers “highly sensitive” to competition from Korean imports and the FTA’s reciprocal market access for molds, machinery, and raw materials. The SPI noted that Korean tariffs for over 65 percent of plastic products would be eliminated within 3 years of the implementation of the FTA, and within 5 years, Korean tariffs on over 99 percent of U.S. exports would be eliminated. Conversely, a vast majority of U.S. tariffs on plastic products will be phased out over 10 years. The duty phaseouts for the raw materials (polymers/resins), molding machinery, and molds provide reciprocal benefits for both countries. As a result of the tariff eliminations, SPI says the FTA offers significant opportunity for the plastics industry. Telecommunications Industry Association 55 In a written submission to the Commission, the Telecommunications Industry Association (TIA) stated that it is the leading trade association representing the information and communications technology (ICT) industry, with approximately 600 member companies that manufacture or supply the products and services used in global telecommunications. Overall, 54 Society of the Plastics Industry, written submission, June 21, 2007. 55 Telecommunications Industry Association, written submission, June 27, 2007. 7-28
the TIA stated that it supports the telecommunications provisions contained in the U.S.- Korea FTA. Specifically, U.S. firms will benefit from commitments related to access to and use of public telecommunications networks, interconnection, number portability, resale, unbundling, and access to submarine-cable landing stations. The TIA noted that many of the FTA’s provisions expand upon commitments contained in the WTO’s Agreement on Basic Telecommunications, citing provisions on number portability and dialing parity, as well as expanded language related to the independence of the telecommunications regulator. Similarly, the TIA singled out provisions related to technological neutrality, stating that the FTA’s strong language goes beyond other trade agreements by limiting the conditions under which parties can specify the use of certain technologies. The TIA also expressed support for FTA provisions that eliminate the 49 percent foreign investment ceiling in Korean telecommunication services providers 2 years after the FTA enters into force, although it noted that investment ceilings would remain for KT Corporation and SK Telecom. Time Warner Inc. 56 Time Warner stated in a written submission to the Commission that it is a leading entertainment and media company, whose businesses include interactive services, cable systems, filmed entertainment, television networks, and publishing. It stated that, within Korea, it is primarily involved in the licensing and distribution of content for pay television, motion pictures, home entertainment products (such as DVDs), and the licensing of intellectual property for product promotions. Time Warner stated that it strongly supports the U.S.-Korea FTA and stated that the agreement’s IPR and market-access provisions will benefit the U.S. media and entertainment industry. According to Time Warner, under the FTA, Korea will relax several important market access barriers. For example (1) the annual screen quota requiring theaters to show Korean films will be locked in at 73 days (down from 146 days); (2) television broadcasting content quotas will be reduced for films and animation programs; (3) U.S. investment will be allowed in the Korean IPTV market; and (4) 3 years after entry into force of the FTA, foreign investors will be able to own 100 percent of the equity in local program providers. Time Warner added that it welcomed these changes and highlighted that market preferences rather than national quotas should determine what is available to audiences. Additionally, the IPR provisions of the FTA will bring significant benefits to U.S. content producers. According to Time Warner, the FTA will implement “gold standard” provisions, which includes commitments by Korea to (1) authorize customs officials to seize pirated goods, (2) enact anticamcording legislation, (3) include language committing Korea to WIPO digital treaty implementation, and (4) extend the term of copyright protection for films to 70 years. Travel Goods Association 57 In a written submission to the Commission, the Travel Goods Association (TGA) stated that it represents the manufacturers, distributors, retailers, promoters, sales representatives, and suppliers of luggage and other products for people who travel. The TGA added that it 56 Time Warner Inc., written submission, June 21, 2007. 57 Travel Goods Association, written submission, June 27, 2007. 7-29
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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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in the FTA. The awards made by any
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Table 6.1 U.S.-Korea FTA: Industry
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(ITAC 5) report cited as particular
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Section C of Chapter 11 and the lac
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practices, and violations of consum
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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
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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 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: PhRMA identified what it views as t
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
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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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