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

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Additionally, although current regulations do not include feedstuffs under GM labeling requirements, Living Modified Organisms (LMO) legislation is expected to require environmental risk assessments for LMOs for food, feed, and processing and for seed sometime in 2007. The KFDA prohibits “non-GMO” and “GMO-free” labeling on products under its purview, and the MAF allows such labels on its products only if the food is 100 percent GMO-free. TRQ Administration: Agricultural imports typically enter the Korean market via one of three distribution systems: consignments to state trading entities (STEs), import quota auctions, or case-by-case distribution of import rights to final users. When STEs or producer associations are responsible for TRQ administration, a potential conflict of interest arises. • In 2004, the average fill ratio for agricultural TRQs was 70 percent. Reasons cited for unutilized quota included low domestic demand, quarantine measures, and breach of agreement by the exporter. • Korea’s flexible tariff rate system includes adjustment, emergency, special emergency, and seasonal tariffs. Where a gap exists between Korea’s applied tariff rate and maximum bound tariff rate, the government may legally impose temporary additional tariffs up to the bound rate. The uncertainty that results from flexible tariffs may complicate planning for producers and exporters. Customs Administration: The WTO reported in 2004 that Korean customs practices seem to differ significantly from international norms in conformity testing, inspection, and acceptance of overseas results. Examples of regulations include • Strict quarantine assignments and sanitary and phytosanitary standards: In 2005, revisions were announced to eliminate mandatory laboratory inspections and require only document inspections. These revisions would apply to agricultural products that have a five-year clean record and that the KFDA commissioner recognizes as safe. • Customs classification standards are reported to change arbitrarily, and misclassification of blended products into base-product categories has resulted in higher tariff charges. Increases in sample sizes for import price checks have also reportedly been utilized to protect Korean farmers. • To enter Korea, agricultural products generally must clear several different customs agencies. This increases the chance of port delays, which can be costly due to the perishable nature of many agricultural products. Other Regulations: The Korean government also maintains regulations related to food additives, biotech environmental assessments, biotech advertising, pesticide residue levels, disease and pest control, genetically modified agricultural products, and packaging materials. Examples of other regulations include • Korea maintains a positive list of approved food additives; in July 2006, it contained 627 items. If an additive is not registered in the Korean Food Additive Code, or usage in a certain food is not specified, the additive is prohibited, regardless of CODEX standards. Thus, certain ingredients, food colors, dyes, and manufacturing processes considered safe by CODEX are prohibited in Korea. K-4
Additionally, foods and food additives developed through recombinant DNA techniques may not be distributed commercially until the KFDA commissioner confirms that they pose no health risk to humans. The process of adding a new additive or usage to the list can be a time-consuming and burdensome. • Environmental risk assessments for biotech crops used for food, feed, and seed were scheduled to become mandatory when the Living Modified Organism Act was to take effect in 2007. Safety assessments for biotech feed are also in development. • The Korean food code defines maximum residue levels (MRLs) for 370 pesticides. As with additives, Food Code standards supersede CODEX standards. If the Korean Food Code does not define a pesticide MRL, CODEX standards then apply. As of July 2006, the KFDA English Web site of MRLs was discontinued for Web site changes. • For disease and pest control reasons, Korea prohibits entry of most fresh fruit from most countries. Korea permits import of oranges, lemons, limes, and persimmons from all U.S. states except Florida, Hawaii, and Texas. • As of 2004, neither importation nor domestic production of genetically modified agricultural products (GMAPs) was permitted in Korea. Funding for detection of GMAPs increased substantially in 2004. • Polyvinyl chloride (PVC) shrink wrap packaging is subject to regulations as of 2001. Recyclable packages must include “separation and discharge” labels. Sources: USDA, FAS, Global Agriculture Information Network. Republic of Korea: Food and Agricultural Import Regulations and Standards, 2006; USDA, FAS, GAIN report, Republic of Korea: Food and Agricultural Import Regulations and Standards, 2005, 32; USDA, ERS, “Genetically Engineered Crop Varieties,” Amber Waves, September 2004, 1; Sally Schuff, “Syngenta reports mix-up with biotech corn,” Feedstuffs, March 28, 2005; USDA, FAS, Global Agriculture Information Network. Republic of Korea: Food and Agricultural Import Regulations and Standards, New Country of Origin Labeling Requirements, 2006; World Trade Organization Committee on Technical Barriers to Trade. Notification G/TBT/N/KOR/135, 2007; The Economist Intelligence Unit. South Korea Country Commerce. New York, NY: The Economist Intelligence Unit Limited, 2006; World Trade Organization, Trade Policy Review: Republic of Korea. WTO Secretariat Trade Policy Review Body, 2004; Office of the U.S. Trade Representative. National Trade Estimate Report on Foreign Trade Barriers, 2007; and “Codex Alimentarius.” http://www.codexalimentarius.net/web/index_en.jsp (accessed July 11, 2007). K-5
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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.
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Nam, In-Soo. “Helio's Losses To W
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Powers, Mark. Northwest Horticultur
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Smith, Brad. American Council of Li
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U.S.-Korea Business Council (USKBC)
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______. “Korea, Republic of Oilse
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U.S. International Trade Commission
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Ward, David. American Council on Ed
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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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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
Page 384 and 385: are in effect import prices, and th
Page 387: APPENDIX K Overview of Agricultural
Page 392: About This Report The United States
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