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

U.S.-Korea FTA
Chapter-by-Chapter Summary
FTA Chapter 1—Initial Provisions and Definitions
The text provides that the parties agree to set up a free trade area that is consistent with the
1994 General Agreement on Tariffs and Trade (GATT). Each party affirms all existing rights
and obligations with respect to the previous agreements to which both are parties, and states
that the FTA shall not be construed as affecting any bilateral international legal obligation
that provides for more favorable treatment of goods, services, investments, or persons than
that provided for by the FTA. Among the general definitions in the FTA, the term “territory”
is defined with respect to Korea as the land, maritime, and airspace over which that country
exercises sovereignty, including the seabed and subsoil adjacent to and beyond its territorial
sea over which it exercises sovereign rights under international and domestic law. With
respect to the United States, “territory” is defined as including the customs territory (the 50
states, the District of Columbia, and Puerto Rico), foreign trade zones in the United States
and Puerto Rico, and any areas beyond its territorial seas within which it may exercise
sovereign rights over the seabed and subsoil and their natural resources in accordance with
international and domestic law.
FTA Chapter 2—National Treatment and Market Access
for Goods
The FTA commitments on national treatment and market access are based upon and similar
in legal form to the corresponding provisions of the GATT 1994. Under the chapter, the
parties agree to eliminate their customs duties on originating goods as provided in the
attached schedules, and to refrain from increasing any duty rate, imposing a new rate, or
adopting or maintaining import- or export-related prohibitions or restrictions relating to
bilateral trade, except as authorized by GATT 1994. Further, the parties may agree to
accelerate the elimination of any duty set out in their schedules. Duty-level ceilings are
provided in the event that a concession must be withdrawn; a party can impose a duty
authorized by the WTO Dispute Settlement Body or return to a higher FTA scheduled duty
rate after a unilateral duty reduction.
Other provisions in this chapter are similar to those of other FTAs and deal with temporary
importations, reentry of repair or altered goods, and other customs procedures. Article XI of
GATT 1994 controls whether a specific measure is allowed under the FTA. No new waiver
of customs duties, expansion of a waiver, or continuation of an existing waiver that is
conditioned on fulfilling a performance requirement can be allowed. Import licensing must
comply with the WTO agreement on that subject, and no duties can be charged on the entry
of commercial samples or related advertising materials. Other provisions ban consular
transactions and export duties along with the imposition or continuation of merchandiseprocessing
fees on originating goods. Other administrative fees and charges that are not
duties or their equivalent must be directly related to the cost of services being rendered; all
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