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

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3-20 Table 3.9 U.S.-Korea trade and tariff liberalization for selected fruit, 2006 HTS Item description U.S. exports to Korea (1,000 dollars) U.S. Exports Total U.S. exports (1,000 dollars) Korean share in total U.S. exports (Percent) MFN applied duty (Percent) Tariff liberalization schedule 080920 Cherries, sweet or tart, fresh 10,217 216,417 4.7 24 • Immediate elimination 080620 Grapes, dried (including raisins) 5,201 211,085 2.5 21 • Immediate elimination 080610 Grapes, fresh 3,240 664,500 0.5 45 • May 1–Oct. 15:17-year linear • Oct. 16–April 30: Reduced immediately to 24 percent and then removed in 4 equal annual stages beginning in year 2 081110 Strawberries, frozen, uncooked, or cooked by steaming or boiling in water, whether or not sweetened 223 25,892 0.9 30 • 5-year linear 080810 Apples, fresh 82 560,781 0.0 45 • Fuji variety: 20-year linear • All other fresh varieties: 10 year linear • Also subject to safeguards. 080820 Pears and quinces, fresh 58 132,970 0.0 45 • Asian variety: 20-year linear • Other fresh varieties: 10-year linear 080930 Peaches, including nectarines, fresh 0 132,260 0.0 45 • 10-year linear 081010 Strawberries, fresh 0 280,736 U.S. Imports 0.0 45 • 9-year linear Imports from Korean share in MFN applied Korea Total U.S. imports total U.S. exports duty HTS Item description (1,000 dollars) (1,000 dollars) (Percent) (Percent) Tariff liberalization schedule 808204000 Pears and quinces, FRESH, entered during the 20,833 66,445 31.4 0.3 cents per • Immediate elimination period from July 1 to March 31 of the following year kg Sources: Official statistics of the U.S. Department of Commerce; and USTR, “Final - United States - Korea FTA Texts,” 2007, U.S. Tariff Schedule and Korea Tariff Schedule.
Market access in Korea for several U.S. noncitrus fruit products has been hampered by SPS issues as well. 96 SPS issues, including alleged pests and diseases, such as codling moth and fire blight, have effectively halted U.S. apple exports to Korea. 97 Exports of fresh peaches have been halted as a result of specific SPS concerns, primarily fumigation protocols. U.S. exports of fresh pears have also been prohibited from entering the Korean market because of SPS issues that are naturally endemic to the Northwest pear growing industry. The proposed FTA would establish a Committee on Sanitary and Phytosanitary Matters in order to resolve SPS issues through science and risk-based assessments. If these SPS issues are resolved, then the industry predicts that the market has tremendous potential for U.S. exporters. An industry representative also stated that the resolution of these issues, along with the phasing out of tariffs, could lead to potential apple exports of between $500,000 and $1 million in the first year following the resolution of these issues. 98 The industry notes, however, that the effect on U.S. peach exports will likely be small if the protocol requires fumigation using methyl bromide, because U.S. industry is concerned that methyl bromide detracts from the product’s quality. 99 An industry representative also estimates that if a science-based protocol is established and can resolve the naturally endemic SPS issues without exorbitant costs to the fresh pear industry, exports to Korea would increase to between $500,000 and $680,000 in the first year. 100 Exports of cherries to Korea have grown significantly, averaging year-over-year growth of over 40 percent per year since 2003. This growth was initially spurred by the fact that, in 2004, all varieties of cherries were permitted for import into Korea. Prior to that only Bing variety cherries were permitted into the market. 101 In recent years, U.S. cherries have had an 85-percent market share in Korea. 102 U.S. fresh cherry exports would likely benefit from the immediate elimination of Korea’s 24 percent tariff upon the implementation of the FTA. According to industry representatives, the immediate elimination of the tariff would equate to a cost decrease of approximately $0.75 to $0.90 per lb. 103 In total, U.S. cherry exports would be expected to increase by 30–40 percent or approximately $3.5 million the first year following the implementation of the FTA. 104 Upon implementation of the FTA, both out-of-season (October 16–April 30) and in-season (May 1–October 15) fresh grape exports would likely benefit from tariff reductions. Out-ofseason grapes would benefit from a more accelerated schedule (table 3.9). The majority of U.S. fresh grapes are imported from October through January 105 and would therefore benefit from the out-of-season tariff reduction. Korean domestic fresh-grape production is the primary source of competition for U.S. grapes in Korea. The Korean domestic industry is significant in size, producing 360,000 mt in 2005. 106 Korean growers generally harvest in late summer and early fall, similar to when American growers harvest. The California growing season, however, is slightly longer and extends through the late fall which, along with the tariff reductions, would allow U.S. grapes to gain market share during the months when 96 According to official statistics of the U.S. Department of Commerce, exports of fresh apples, pears, or peaches to Korea have not exceeded $100,000 over the past 5 years. 97 Hansen, “Korean Agreement Reduce Fruit Tree Tariffs,” May 15, 2007. 98 Northwest Horticulture Council representative, interview by Commission staff, June 1, 2007. 99 Industry representative, interview by Commission staff, June 11, 2007. 100 Industry representative, interview by Commission staff, June 6, 2007. 101 USDA, FAS, “Korea Product Brief, Fresh Stone Fruit 2005,” February 1, 2005. 102 USDA, FAS, “Republic of Korea Product Brief, Produce Market Brief Update 2005,” October 5, 2005. 103 Powers, written submission to the Trade Policy Staff Committee, Office of the USTR, March 14, 2006. 104 Northwest Horticulture Council representative, interview by Commission staff, June 1, 2007. 105 USDA, FAS, “Republic of Korea Product Brief, Produce Market Brief Update 2005,” October 5, 2005. 106 UN FAO, “Core Production Data,” July 18, 2007. 3-21
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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
Page 24 and 25: Sector-specific Assessments The U.S
Page 26 and 27: total increased fish imports from K
Page 28 and 29: Korea would likely limit the impact
Page 30 and 31: Intellectual property rights (IPR):
Page 32 and 33: sector barriers. 5 These merchandis
Page 34 and 35: Table 1.1 U.S.-Korea FTA: Location
Page 36 and 37: Table 1.2 Korean tariff rates on im
Page 38 and 39: Table 1.4 U.S.-Korea FTA: Summary o
Page 40 and 41: observed GDP for model regions). Th
Page 42 and 43: Box 2.1 Interpreting the model resu
Page 44 and 45: Table 2.1 U.S.-Korea FTA: Simulated
Page 46 and 47: 2-8 This page has been updated to r
Page 48 and 49: Figure 2.2 U.S-Korea FTA: Simulated
Page 50 and 51: As shown in figure 2.2, the largest
Page 52 and 53: 2-14 This page has been updated to
Page 54 and 55: Economy-wide Impact of Implementing
Page 56 and 57: Grain (Wheat, Corn, and Other Feed
Page 58 and 59: Korea imported 3.8 million mt of wh
Page 60 and 61: U.S. oilseed product exports to Kor
Page 62 and 63: Table 3.2 U.S. oilseed product expo
Page 64 and 65: Table 3.3 Animal feed exports to Ko
Page 66 and 67: consumed domestically by the U.S. l
Page 68 and 69: ates. For corn starch, the United S
Page 70 and 71: quota rates have been effectively e
Page 72 and 73: Noncitrus Fruit 87 Views of Interes
Page 76 and 77: Korean grapes are much more costly
Page 78 and 79: Potato Products 122 Assessment The
Page 80 and 81: ate is 304 percent ad valorem. 141
Page 82 and 83: Other Vegetables 162 Assessment The
Page 84 and 85: U.S. exports of other fresh and pro
Page 86 and 87: tariff concessions that could accru
Page 88 and 89: Dairy Products 215 Similarly, the p
Page 90 and 91: TRQ for food whey, 223 based on cur
Page 92 and 93: potential changes in trade based so
Page 94 and 95: Figure Figure 3.1 Korea: Beef and v
Page 96 and 97: Views of Interested Parties The inc
Page 98 and 99: are subject to the same food safety
Page 100 and 101: enefit under the provisions of this
Page 102 and 103: Box 3.2 Potential price and quantit
Page 104 and 105: 50 percent, while the vegetable jui
Page 106 and 107: and major supplier, and U.S. tariff
Page 108 and 109: textiles and apparel through 2005.
Page 110 and 111: U.S. Exports The impact of the FTA
Page 112 and 113: passage. NCTO indicated that, even
Page 114 and 115: In its report, the ITAC on Distribu
Page 116 and 117: of the U.S. footwear market, with C
Page 118 and 119: of these producers. 362 RPFMA noted
Page 120 and 121: prohibit improper inducements by ph
Page 122 and 123: 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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government to take appropriate meas
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environmental laws. 102 In the U.S.
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not limited to, policies on commerc
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Economic indicators 2002 2006 Popul
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Table E.1 Leading U.S. exports to K
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APPENDIX F GTAP Model
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Updating the GTAP Database The curr
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Key Assumptions Agency. 4 The price
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Table F.2 U.S.-Korea FTA benchmark
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Measuring the Impacts of the FTA an
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General Effects of Trade Agreements
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APPENDIX H Tariff Equivalents in Ko
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Previous Literature The method for
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For the purposes of this report, a
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Table H.1 Tariff equivalents in Kor
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APPENDIX I Services Nonconforming M
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Table I.1 U.S.-Korea FTA: Korean se
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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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