The United States and the Republic of Korea, April 1, successfully concluded a free trade agreement that will create economic opportunities for their people and enhance their economic and strategic partnership.
“This is a historic moment for our two countries. The United States-Korea Free Trade Agreement (KORUS FTA) will provide U.S. farmers, ranchers, manufacturers, and service providers exciting new market opportunities in a growing, dynamic country. It will contribute to Korea’s successful transformation to a 21st century economic power," said U.S. Trade Representative Susan C. Schwab.
"The completion of this landmark agreement is testimony to the industriousness, creativity and determination of our two peoples. It demonstrates that two countries with large, complex economies and robust public involvement in policy debates can work through great challenges to build stronger trade and investment ties."
The KORUS-FTA represents the United States’ most commercially significant FTA in over a decade. The Republic of Korea is the world’s tenth largest economy, with a GDP of nearly $1 trillion. Korea is already the United States.
Agriculture:
Historically, Korea has been one of the most protected agricultural markets in the world. The KORUS FTA will create highly valuable new export opportunities for American farmers and ranchers by eliminating and phasing out tariffs and quotas on a broad range of products. Under the agreement, over $1 billion worth of U.S. farm exports to Korea will become duty-free immediately. Most remaining tariffs and quotas will be phased out over the first ten years the agreement is in force.
Industrial Goods and Consumer Products:
Nearly 95% of bilateral trade in consumer and industrial products becomes duty-free within three years of entry into force of the Agreement, with most remaining tariffs eliminated within 10 years.
Textiles:
With the inclusion of the “yarn forward” rule of origin, the KORUS FTA will give apparel products from Korea preferential access to the U.S. market while supporting U.S. fabric and yarn exports and jobs. Textile and apparel makers in both countries will benefit from a special textile safeguard and strong customs enforcement requirements.
Background:
The KORUS FTA was launched on February 2, 2006, and the first of eight formal negotiating rounds took place in June 2006.
Korea was the world’s seventh largest goods exporter ($284 billion) and importer ($261 billion) in 2005 – the fourth largest in Asia. Korea was also the world’s tenth largest services exporter ($44 billion) and sixth largest services importer ($58 billion) in 2004. Over the past ten years, Korea’s real average annual growth rate in trade was two and a half times the pace of its GDP growth.
This FTA will strengthen the more than fifty-year-old alliance between the United States and Korea and will underscore the substantial U.S. engagement in and commitment to East Asia. The KORUS FTA will also help cement important political and economic reforms that Korea has undertaken in the past decade and help promote strongeconomic relations with the region.
