South Korea recently ratified a free trade agreement with the United States.  The agreement is expected to boost U.S. GDP by $10bn to $12bn.  The bilateral trade volume between the two countries was reported to be $88bn last year.  Although the Korean government has put in place initiatives to mitigate opposition, such as “FTA support” [our translation: compensatory subsidies] to farmers and the exclusion of rice from the agreement, its passage of the was still very controversial, with a tear-gas grenade being set off by an opposition MP in an attempt to prevent the vote.

The United States Congress passed the trade agreement last month.  According to the Office of the United States Trade Representative, the agreement includes the following provisions:

Under the FTA, nearly 95 percent of bilateral trade in consumer and industrial products will become duty free within five years of the date the FTA enters into force, and most remaining tariffs would be eliminated within 10 years.

For agricultural products, the FTA will immediately eliminate or phase out tariffs and quotas on a broad range of products, with almost two-thirds (by value) of Korea’s agriculture imports from the United States becoming duty free upon entry into force.

For services, the FTA will provide meaningful market access commitments that extend across virtually all major service sectors, including greater and more secure access for international delivery services and the opening up of the Korean market for foreign legal consulting services.

In the area of financial services, the FTA will increase access to the Korean market and ensure greater transparency and fair treatment for U.S. suppliers of financial services. The FTA will address nontariff barriers in a wide range of sectors and includes strong provisions on competition policy, labor and environment, and transparency and regulatory due process.

The KORUS FTA will also provide U.S. suppliers with greater access to the Korean government procurement market. In addition to strengthening our economic partnership, the KORUS FTA would help to solidify the two countries’ long-standing geostrategic alliance.

Further Reading

Christian Science Monitor: South Korea approves free trade agreement with US despite deep divisions

ABC: South Korean MP unleashes tear gas in Parliament

Yonhap News: S. Korea executes 27 pct. of FTA support budget for farmers

Yonhap News: Lee calls U.S. FTA ‘right thing’ to do for S. Korea’s survival

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