U.S. – Korea Trade Agreement Headed to Congress
South Korea and the U.S. have signed supplementary amendments to their landmark free trade agreement (FTA), paving the way for the deal to be voted on by lawmakers in both countries.
The two governments recently exchanged documents signed by South Korean Trade Minister Kim Jong-hoon and U.S. Trade Representative Ron Kirk. Kim and Kirk worked out a hard-fought compromise in early December to salvage the original agreement, which was signed in June 2007.
According to Kirk—at a recent Congressional hearing—President Barack Obama will submit the U.S.-Korea Free Trade Agreement (KORUS) to Congress within the next few weeks with the hope of securing its approval by early spring. South Korea is the U.S.’s seventh largest trading partner and has the 15th largest economy in the world.
The FTA is expected to boost bilateral trade by billions of dollars and help create tens of thousands of jobs in both countries—advancing the president’s national goal of doubling exports in five years. It was negotiated and signed by the George W. Bush administration, but it has never been submitted to Congress, where legislative action was uncertain.
Last year, the Obama administration re-negotiated the deal, gaining more access to the South Korean auto market for U.S. companies. The two sides agreed to revisions on the elimination of auto tariffs and South Korea said American manufacturers could export a limited number of vehicles that conform only to U.S. safety standards.
Additionally, the agreement would require South Korea to eliminate duties that effectively average 54 percent for agricultural goods and 6.6 percent for nonagricultural goods, while the U.S. would drop duties that average just 9 percent for agricultural goods and 3.2 percent for nonagricultural goods. The beef issue, however, was ultimately not included.
The supplementary deal covers a range of other issues, including tariffs on pork, automotive safety, environmental standards, safeguard provisions, pharmaceutical regulations and mechanisms for dispute settlement.
The free trade agreement, which requires approval by the U.S. Congress and South Korea’s National Assembly, is the largest for an administration since the North American Free Trade Agreement with Canada and Mexico in 1994.
While KORUS should gain passage this spring, the timing of bringing to Congress two other concluded FTAs is less clear. Kirk has said the President asked him to “immediately intensify our engagement” with Colombia and Panama over stalled FTAs with the two countries that were signed in 2006 and 2007, respectively. Kirk is hopeful for results in 2011 but has said “serious issues” must be resolved before the administration can submit the two FTAs for congressional consideration.
In the case of Colombia, those issues include workers’ rights and violence against labor union organizers. In the case of Panama, the major stumbling block is the country’s designation as a tax haven by the Organization for Economic Cooperation and Development and the related lack of a tax-information exchange agreement. Kirk said both countries have begun to take important steps to address the administration’s concerns.