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

CHAPTER 3
Sector-specific Assessments
This chapter provides an assessment of the likely impact of the market access provisions of
the U.S.-Korea FTA on specific U.S. sectors. It builds on the economy-wide analysis in the
previous chapter by analyzing the impact of both the immediate and the phased elimination
of tariffs and TRQs on more narrowly defined sectors. The chapter focuses on grain; oilseed
products; animal feeds; starches; citrus fruit; noncitrus fruit; potatoes; other vegetables; tree
nuts; dairy products; meat (beef, pork, and poultry); seafood; selected processed foods;
nonalcoholic beverage products; textiles and apparel; leather goods and footwear;
pharmaceuticals; machinery, electronics, and transportation equipment; passenger vehicles;
and medical devices. 1 Certain selected sectors overlap significantly with sectors used in the
model employed in the Commission’s economy-wide analysis described in chapter 2 of this
report. For these selected sectors, assessments in this chapter incorporate the results from the
Commission’s economy-wide analysis. 2
Given that Korean tariffs and TRQs are high relative to U.S. tariffs and TRQs, most of these
assessments focus exclusively on potential increases in U.S. exports to Korea. The potential
impact on U.S. imports, production, and employment is analyzed only when potential
changes are not negligible and, therefore, warrant an assessment or when the level of U.S.
protection is relatively high. 3 In addition, a few selected sectors (selected processed foods,
passenger vehicles, and medical devices) are highlighted in order to demonstrate the
importance of and potential effect of Korean NTMs. International price and quantity
comparisons are reported for these selected cases, as they represent cases in which high
import prices and/or low import quantities, by international standards, coincided with reports
of significant NTMs in the Korean market. 4
1 Sectors were selected for analysis according to a number of criteria, including the importance of the
sector or key sector components in terms of bilateral trade relationship, the extent of trade liberalization
under the FTA, the potential for increased bilateral trade as a result of the FTA, and industry and
Commission views regarding the FTA commitments. The assessments in this chapter are based on industry
knowledge and expertise of USITC industry analysts, industry reports and interviews with industry contacts,
reports by functional trade advisory committees on the FTA, testimony at the Commission’s public hearing
for this investigation, and written submissions received in response to the Commission’s Federal Register
notice for this investigation.
2 These results are relative to an estimated 2008 baseline. The impact estimated by the Commission’s
economy-wide model represents a range obtained from conducting sensitivity analysis. See chap. 2 of this
report for additional information regarding the Commission’s economy-wide analysis.
3 Given the substantial number of agriculture-related sectors highlighted in this chapter, an overview of
selected agriculture-related regulations and requirements that may be encountered by U.S. exporters is
provided in app. K.
4 For additional information on the analytical method, see app. J of this report.
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