2016年-PIIE彼得森国际经济研究所_Prospects_for_Implementing_the_Korea_4页_195kb

KORUS FTA Implementation Prospects Summary

Core Content

The Korea-US Free Trade Agreement (KORUS FTA), signed on June 30, 2007, remains pending ratification in both the United States and South Korea. Despite its completion, the agreement has not entered into force due to legislative delays. The primary focus of the implementation debate centers on auto and beef provisions, with additional political and strategic considerations influencing the timeline and outcome.

Key Provisions and Issues

Auto Provisions

• Bilateral Auto Trade: In 2008, the value of auto trade between the US and Korea was approximately $12 billion, with Korea maintaining a $10 billion surplus.
• Tariff Elimination: The KORUS FTA eliminates the 2.5% US auto tariff and sets a 10-year phaseout of the 25% tariff on light trucks.
• Korean Tariff: The 8% Korean auto tariff is removed, which is expected to boost US exports of luxury vehicles.
• Industry Opposition: Ford and Chrysler, along with the UAW union, oppose the FTA, while GM supports it due to its stake in GM-Daewoo.
• Criticism: Critics argue that the FTA should address nontariff barriers such as discriminatory tax policies and regulatory standards in Korea that hinder foreign car imports.
• US Strategy: US officials have resisted managed trade proposals and instead focus on transparency and dispute resolution in the auto sector. They also seek to encourage innovation and joint ventures between the two countries.

Beef Provisions

• Tariff Phaseout: The KORUS FTA phases out the 40% Korean tariff on beef.
• Sanitary Restrictions: Despite tariff reductions, US beef exports are still restricted due to sanitary rules that prohibit the import of cattle over 30 months old.
• Strategic Importance: Resolving the beef issue is significant for increasing US exports and setting a precedent for similar negotiations with other countries, such as Japan.
• Market Dynamics: The BSE crisis in 2003 caused a long hiatus in US beef exports to Korea, allowing Australian suppliers to dominate the market. US producers may struggle to regain market share, especially as Australia is expected to conclude an FTA with Korea soon.

US Ratification Process

• Fast Track Eligibility: The KORUS FTA still qualifies for fast track procedures even after the expiration of Trade Promotion Authority (TPA) in 2007.
• Political Considerations: President Obama and his allies aim to avoid foreign policy or security backlash by securing FTA passage. However, congressional support is uncertain, particularly due to ideological polarization in the trade debate.
• Legislative Timeline: If a deal is reached in November 2010 (Seoul G-20 Summit), the White House plans to submit implementing legislation in early 2011, with the agreement potentially entering into force in late 2011 or early 2012.

Wild Cards Affecting Ratification

1. New Congress Composition: The November 2010 elections could result in Republican gains, especially in the House, which may influence trade voting.
2. FTA Linkage Strategy: The administration may attempt to bundle the KORUS FTA with the Colombia and Panama FTAs in a single bill to streamline the process and reduce opposition.
3. China Currency Bill: The China currency manipulation bill could be introduced in 2011, potentially influencing the trade vote, as both parties seek to counter Chinese economic influence.

Why Congress Will Act

1. North Korea Concerns: The FTA is seen as a strategic tool to reinforce the US-South Korea alliance, especially in light of North Korea’s provocative actions, including nuclear tests and missile launches.
2. Competitive Pressure: With Korea signing or negotiating FTAs with over 50% of its trading partners, the US needs to maintain a level playing field in the Korean market.
3. Credibility of Trade Policy: Delay in ratification undermines US trade credibility, potentially deterring foreign partners from engaging in meaningful negotiations with the US.

Conclusion

The KORUS FTA is a critical trade agreement for the US, with implications for economic competitiveness, foreign policy, and security interests. While industry and labor groups are divided in their support, the strategic importance of the alliance with South Korea and the need to counter Chinese influence are driving the administration to push for ratification. The outcome depends on political dynamics, negotiation success, and external factors such as the China currency bill and Korean-EU FTA.