The Proposed U.S.-South Korea Free Trade Agreement (KORUS ...

CRS-28
! The steel industry opposes the provision to establish a bilateral
Commission on Trade Remedies (Article 10.8) as “unprecedented,
unnecessary and would provide yet more opportunities for South
Korea to weaken U.S. trade law enforcement.” 88
The specific details of the trade remedies chapter are discussed elsewhere in this
report. Beyond these specific issues ITAC 12 also made a number of other critical
points. It argued that the rules of origin provisions did not follow earlier precedents
and there were concerns with products eventually being produced in the Kaesong
Industrial Complex of North Korea. (See the section on the Kaesong Industrial
Complex.) It objected to the proposed KORUS FTA’s ignoring currency
manipulation issues. They also supported their U.S. automotive customers’ view that
the FTA failed to insure adequately access to the South Korean market for U.S.-made
motor vehicles. On these grounds, “especially with regard to the proposed AD-CVD
provisions, ITAC 12 cannot conclude at this time that the KORUS FTA promotes the
economic interests of the United States and provides for equity and reciprocity within
the steel sector.” 89
Pharmaceuticals and Medical Devices
While pharmaceuticals and medical devices (P&M) are a relatively small part of
U.S.-South Korean trade, they are products in which U.S. producers compete well in
the South Korean market and ones in which manufacturers see increasing export
opportunities as the South Korean economy matures. For years, the U.S. industry and
government have complained about a number of South Korea’s pharmaceutical
policies that allegedly are designed to protect South Korean industry, which
predominately produces generic drugs.
South Korea is among the world’s top 12 largest markets for pharmaceuticals,
accounting for about $8 billion in sales annually. 90 The South Korean market for
medical devices accounts for roughly $2.5 billion in sales annually and is expected
to grow 10-15 % each year in the next several years, in part due to the rapid aging of
the population. 91 While potentially lucrative, South Korea is a market in which U.S.
P&M manufactures claim government regulations have limited their ability to
penetrate that market.
In 2006, the United States exported $493 million in medical devices to South
Korea, accounting for 2.1% of total U.S. exports of those products and 1.5% of total
U.S. exports to South Korea. In 2006, the United States exported $325 million in
pharmaceuticals to South Korea accounting for 1.0% of total U.S. exports of
pharmaceuticals and 1.0% of total U.S. exports to South Korea. In the same year
88 Office of the USTR. Industry Trade Advisory Committee on Steel (ITAC 12). The U.S.-
Korea Free Trade Agreement (April 27, 2007). Main views are summarized in pp. 1-2.
89 Ibid., p. 2.
90 USITC. p. 3-64.
91 Ibid. p. 3-91.