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

technical regulation or conformity assessment procedure. 36 The FTA provisions would
encourage each party to consider a broad range of alternatives for accepting the results of the
other’s conformity-assessment procedures and technical regulations, and, when this is not
possible, to explain why. 37
The TBT chapter would also include unique provisions to address standards- and regulatoryrelated
issues specifically affecting the automotive industry, such as automotive emissions
standards, safety standards, and onboard diagnostics requirements. 38 Further, the chapter
would establish an Automotive Working Group 39 to, among other things, resolve issues that
either party raises with respect to developing and enforcing standards, technical regulations,
and conformity-assessment procedures for the automotive sector. 40
FTA Chapter 10—Trade Remedies
Section A of Chapter 10 contains a bilateral safeguard provision similar to bilateral safeguard
provisions in other free trade agreements that the United States has entered into in recent
years. It would allow a party to increase a rate of duty or suspend further reductions in the
rate of duty if its designated competent authority finds, as a result of the reduction or
elimination of a duty under the agreement, that imports of a good are in such increased
quantities as to be a substantial cause of serious injury, or a threat of serious injury, to a
domestic industry producing a like or directly competitive good. No duty could be increased
to an amount that exceeds the lesser of the current MFN rate of duty or the rate in effect
immediately preceding the date of entry into force of the agreement. The duration of any
measure could not exceed 2 years, except that the period could be extended by up to 1 year
if certain conditions are found to be present. A measure that exceeds 1 year must be
progressively liberalized at regular intervals. A party could not apply a bilateral safeguard
measure more than once against the same good, and a measure could not be applied beyond
the transition period except with the consent of the other party.
A party applying a measure must provide compensation to the other party in an amount
mutually agreed upon; if the parties are unable to agree on compensation, the other party
could suspend concessions with respect to originating goods of the party applying the
safeguard measure that have trade effects substantially equivalent to the safeguard measure.
The FTA allows a party to apply a measure on a provisional basis (for up to 200 days) when
critical circumstances are found to exist. The agreement defines terms and sets out certain
procedural requirements, including notification consultation requirements. Each party would
retain its rights and obligations under Article XIX of the GATT 1994 and the WTO
36 USTR, “Final-United States - Korea FTA Text,” 2007, Article 9.6.
37 Ibid., Article 9.5.
38 Lee, testimony before the USITC, June 20, 2007, 15.
39 The Automotive Working Group is to provide an “early warning system” to address standards,
certification, and other regulatory issues that could develop in the future. When Korea develops new
regulatory requirements, it is obligated to provide such information to the working group as soon as the
information becomes available. The working group is to analyze potential new regulations and provide its
views to the Korean government for purposes of promoting good regulatory practices. U.S.-Korea FTA,
Annex 9-B; USTR, “Trade Facts: Fact Sheet on Auto-Related Provisions in the U.S.-Korea Free Trade
Agreement,” April 3, 2007, 1–2; and USTR, “Fact Sheet: Free Trade with Korea, Brief Summary of the
Agreement,” April 2007, 1.
40 For additional information on the specific automotive standards issues to be addressed, see the sectorspecific
assessment for this industry in chap. 3 of this report.
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