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

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use of electronic authentication in their respective markets; and (3) includes principles that ensure consumers’ reasonable access to the Internet to conduct electronic commerce. First, under the U.S.-Korea FTA, the parties would commit to nondiscriminatory treatment of digital products and agree not to impose customs duties, fees, or other charges on such products, whether traded in physical form or electronically over the Internet. In addition, the parties would agree not to accord less favorable treatment to some digital products than are accorded to other like products because they were created, stored, transmitted, published, or first made commercially available outside its territory, or because of the nationality of the author, performer, producer, developer, or distributor of such digital products. Second, the U.S.-Korea FTA is aimed at ensuring that the parties accept the validity of electronic authentication and electronic signatures. Neither party, for example, may deny the legality of a signature solely because it is in electronic form. Finally, the U.S.-Korea FTA includes provisions that are intended to promote and maintain online consumer protection, including those that foster cooperation in enforcing laws against fraudulent and deceptive e-commerce practices. The FTA introduces principles not included in previous FTAs that would promote consumer access to the Internet to conduct electronic commerce, and that would emphasize the importance of maintaining unrestricted crossborder information flows. Such principles likely reflect the rapid growth of both business-tobusiness and business-to-consumer electronic commerce in Korea in recent years. 65 FTA Chapter 16—Competition-Related Matters Chapter 16 of the FTA would address competition policy, designated monopolies, and state enterprises, with the objective of proscribing anticompetitive business conduct in order to promote economic efficiency and consumer welfare. 66 The chapter would obligate the United States and Korea to maintain competition laws that protect and promote competitive business conditions by proscribing anticompetitive business conduct that might hinder bilateral trade and investment, to maintain authorities responsible for enforcement of these laws on terms of national treatment and MFN treatment, and to provide transparent and nondiscriminatory due-process means to remedy disputes under the FTA concerning violations of these competition laws. The chapter would permit either party to establish or maintain a designated monopoly or state enterprise, but would obligate each party to ensure that such designated enterprises operate in accordance with normal commercial practices that do not abuse their special status, which might otherwise, as a result, create obstacles to bilateral trade and investment. 67 Under the agreement, designated monopolies and state enterprises would be permitted to charge different prices in the marketplace where such differences are based on normal commercial considerations such as supply and demand conditions. The chapter’s provisions governing designated monopolies do not apply to government procurement. Upon request, a party would need to provide public information on designated monopolies and state enterprises at any government level, or on exemptions and immunities to its competition 65 KIEC, Republic of Korea, “Korea e-Commerce: Infrastructure.” 66 USTR, “Final - United States - Korea FTA Texts,” 2007, Article 16.1. 67 Ibid., Article 16.2, and Article 16.4. D-22
laws, if furnished with specifics regarding particular products and markets as well as indications that an entity’s business behavior or exemption from competition laws may be hindering bilateral trade or investment. 68 The chapter includes provisions covering transparency, cross-border consumer protection, consultations, dispute settlement, and definitions of terms. 69 The chapter’s cross-border consumer protection provisions would require the United States and Korea to cooperate on matters of mutual concern concerning consumer protection laws to enhance consumer welfare. 70 The United States Federal Trade Commission, Korea Fair Trade Commission (KFTC), and Korea Ministry of Finance and Economy are to “endeavor to strengthen cooperation” through the exchange of information related to new and current consumer protection laws, including consultations on how to reduce and prevent fraudulent and deceptive commercial practices, and violations of consumer protection laws with significant cross-border aspects. The parties are to aim at identifying obstacles to effective cross-border cooperation in the enforcement of their own consumer protection laws, and are to consider modifying their domestic frameworks to overcome such obstacles. Upon request, the parties would meet to consult on specific matters raised under the provisions of the chapter, when the requestor indicates how the matter affects bilateral trade or investment. 71 Under the agreement, neither party may challenge through dispute settlement the chapter’s core goals and obligations regarding national competition laws or proscribing anticompetitive business conduct, the chapter’s provisions on cross-border consumer protection, or the chapter’s obligations concerning consultations. 72 FTA Chapter 17—Government Procurement Chapter 17 of the FTA would address procurement of goods and services by any contractual means—purchase, lease, rental, hire, etc.—where the value of the contract reaches or exceeds the threshold level for procurement contracts issued by the government entities listed in the annex to the chapter. The procurement covered under the chapter is government procurement and may not involve commercial sale, resale, or use in commercial production. Exclusions would include (1) noncontractual agreements or assistance in the form of grants, loans, fiscal incentives and guarantees, equity infusions, and the like; (2) procurement by a fiscal or similar agency, services related to regulated financial institutions, and matters related to public debt, government bonds, notes, and other securities; and (3) procurement specifically for the provision of international assistance, including development aid. Procurement under the chapter would cover digital/information technology products, although the FTA chapter on electronic commerce imposes no further obligation regarding procurement of digital products. Both the United States and Korea are signatories to the WTO Agreement on Government Procurement (GPA), and the FTA chapter on government procurement reaffirms both 68 Ibid., Article 16.5. 69 Ibid., Article 16.5, Article 16.6, Article 16.7, Article 16.8, and Article 16.9. 70 Ibid., Article 16.6. 71 Ibid., Article 16.7. 72 Ibid., Article 16.8. D-23
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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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Both the United States and Korea ar
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8) 87 also expressed support for th
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Box 6.2 Recent conditions of IPR pr
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protection to life of the author pl
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Views of Interested Parties A numbe
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GPHA stated in testimony before the
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Box 6.3 Labor market conditions in
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FTA Chapter 20—Environment 131 As
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trade measures are the least disrup
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FTA Chapter 22-Institutional Provis
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Views of Interested Parties The Ind
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CHAPTER 7 Literature Review and Sum
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7-3 Table 7.1 Model, liberalization
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terms. Much of the increase in U.S.
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Liberalization generated small incr
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Sander Levin, Member of the U.S. Ho
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Regarding footwear and travel goods
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Korea’s establishment as a region
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The California Table Grape Commissi
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order activity, and facilitate expa
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At the Commission’s hearing, Mr.
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Information Technology Industry Cou
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With respect to tariff and nontarif
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deterring illegal transshipments. I
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PhRMA identified what it views as t
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the TIA stated that it supports the
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access to the market. The Council a
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United States, Spain, Chile, Brazil
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Bibliography Advanced Medical Techn
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AT&T. “AT&T Reaction to Free Trad
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______. “Korea-U.S. Free Trade Re
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______. “Country Finance: South K
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Global Trade Information Services I
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International Labor Organization (I
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Jones, Laura E. Executive Director.
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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
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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
Page 310 and 311: ORGANIZATION AND WITNESS: PANEL 1 (
Page 313: APPENDIX D U.S.-Korea FTA: Chapter-
Page 316 and 317: fees and charges on trade in goods
Page 318 and 319: determines the tariff classificatio
Page 320 and 321: The transparency provisions would a
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Page 324 and 325: technical regulation or conformity
Page 326 and 327: procedures), and practices of a par
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Page 336 and 337: parties’ rights and obligations u
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Page 347 and 348: Economic indicators 2002 2006 Popul
Page 349 and 350: Table E.1 Leading U.S. exports to K
Page 351: APPENDIX F GTAP Model
Page 354 and 355: Updating the GTAP Database The curr
Page 356 and 357: Key Assumptions Agency. 4 The price
Page 358 and 359: Table F.2 U.S.-Korea FTA benchmark
Page 360 and 361: Measuring the Impacts of the FTA an
Page 363 and 364: General Effects of Trade Agreements
Page 365: APPENDIX H Tariff Equivalents in Ko
Page 368 and 369: Previous Literature The method for
Page 370 and 371: For the purposes of this report, a
Page 372 and 373: Table H.1 Tariff equivalents in Kor
Page 375: APPENDIX I Services Nonconforming M
Page 378 and 379: Table I.1 U.S.-Korea FTA: Korean se
Page 381: 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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