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

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agreement prompted the Korean government to seek changes. In late June, both
countries confirmed a “voluntary private sector” arrangement that will allow Korean
firms to import U.S. beef produced only from cattle less than 30 months old, and
announced some changes to the April agreement. Both countries view the voluntary
arrangement as a transitional step intended to improve Korean consumer confidence
in U.S. beef.
The KORUS FTA does not give U.S. rice and rice products any preferential
access to South Korea’s market. The agreement only requires South Korea to
continue to abide by its multilateral trade commitments to increase rice imports.
Access for U.S. citrus products was not settled until just before the talks concluded.
With South Korea protecting its orange sector by a 50% tariff, negotiators
compromised on a multi-part solution. A small duty free quota was created for “inseason”
U.S. navel oranges that would grow slowly in perpetuity. Sales during this
September to February period in excess of this quota would continue to face the high
50% tariff. For “out-of-season” oranges that pose less competition to South Korea’s
orange producing sector, the tariff would be phased out by year 7.
Automobiles
Trade in autos and autoparts proved to be among the most difficult issues tackled
by U.S. and South Korean negotiators, pitting an increasingly competitive South
Korean industry seeking to increase its market share in the United States and a U.S.
industry that wants South Korea to eliminate policies and practices that seemingly
discriminate against U.S. auto imports. The KORUS FTA would:
! eliminate most South Korean tariffs on U.S.-made motor vehicles.
South Korea would immediately eliminate its 8% tariff on U.S.-built
passenger cars and its 10% tariff on pickup trucks.
! reduce discriminatory effects of engine displacement taxes. South
Korea would simplify its three-tier “Special Consumption Tax” and
would also simplify its five-tier “Annual Vehicle Tax” both of which
are based on engine displacement by making it a three-tier system.
! harmonize standards and create an “Automotive Working Group.”
The agreement provides for self-certification on safety and emissions
standards for a limited number of U.S.-exported vehicles, and a
commitment that South Korea will evaluate emissions using the
methodology applied by the State of California. South Korea also
agreed “not to adopt technical regulations that create unnecessary
barriers to trade and to cooperate to harmonize standards.”
! eliminate of U.S. tariffs and provide for “snapback” clause. The
United States would immediately eliminate its 2.5% duty on
gasoline-fueled passenger vehicles with engine displacement up to
3000 cc, would phase out over three years the 2.5% duty on South
Korean imports with larger engine capacity or that are dieselpowered
, and would phase out over ten years the 25% duty on South
Korean pickup trucks.