In October , several new U.
Current Politics and Economics of Northern and Western Asia
The United States passed legislation that had been in the works for the past several years, agreeing to new trading terms with Panama, Colombia, and South Korea. With the passing of this legislation, numerous trade barriers and tariffs will be removed from the U. This new analysis will examine the agreements made between the U.
Criticism and concerns over these trade agreements will be considered as well. Panama With an economic growth rate of 6. The U. Both Panama and the U. The passage of the trade deal will not only strengthen economic ties, but diplomatic ones as well.
Panama has recently been looking to expand their global reach with trade deals with Canada and the European Union. Thus, this agreement is essential for continued U. As of , 39 percent of Colombian exports have been destined for the U. This bodes quite well for Colombia who, up until now, faced very uneven tariff implementations with the U. Adding to these already positive trade outcomes, the deepening of relations between these two countries is predicted to help stem the production of cocaine by allowing alternative fields of economic opportunity to flourish in Colombia.
Relations between the U. Media reporting on the currency provisions suggests they are non-binding.
United States–Korea Free Trade Agreement
Adding these currency provisions is not particularly significant, as the Trump administration is mostly just carrying over an Obama-era policy. This would be a bigger deal, as there have never been such detailed provisions on this issue in trade agreements, and U. The specific terms will be important for determining the impact.
Turning to the amendments and modifications to the existing KORUS, the outcomes on automobile exports and truck imports stand out. Through the renegotiation, this quota has now been increased to 50, vehicles per manufacturer. On its face, this is a good market-opening provision, and a positive development for increasing access to the Korean market. However, the real economic value is not clear. In , U. Given the low volume of U.
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While there will be no immediate impact, because Korea does not currently export trucks to the U. It has been suggested that the reason Korea has not yet sold light trucks on the U. For example, South Korea made concessions in agriculture and services while the United States made concessions on rice and textiles. Yet, U. Some highlights of the results of the agreement are provided below. Tariffs and import quotas on most other agricultural goods would be phased out within 10 years, with a few commodities and food products subject to provisions that phase out such protection by year However, access for seven U.
Much effort went into negotiating provisions covering three agricultural commodities of export interest to the United States. Also, South Korea would have the right to impose safeguard tariffs on a temporary basis in response to any potential surge in imports of U. However, negotiators did not reach a breakthrough by the end of the ta lk s on the separate but parallel issue of how to resolve differences on the terms of access for all U.
Though sales of U. This requires the removal of specified risk materials known to transmit mad cow disease from cattle that are less than 30 months old when slaughtered. See Appendix A for additional information. Negotiations on access for U. Special treatment for U. In this sector, an increasingly competitive South Korean industry seeking to increase its market share in the United States is pitted against a U. The United States would immediately eliminate its 2. The two countries agreed to liberalize trade in services by opening up their markets beyond what they have committed to do in the World Trade Organization WTO.
Trade remedies were a critical issue for South Korea and a sensitive issue for the United States. The FTA would also provide for a binational consultative committee to review trade remedy decisions involving one another. Inside U. April 13, The USITC based this estimate primarily on the removal of tariffs and tariff-rate-quotas, that is, barriers that can be relatively easily quantified.
The study concludes that U. The study notes that U. The study estimates that changes in aggregate U. However, while some sectors, such as livestock producers, would experience increases in employment, others such as textile, wearing apparel, and electronic equipment manufacturers would be expected to experience declines in employment. The study estimated some of the dynamic, or long-run, economic effects in addition to the static, or one-time, effects of the FTA on South Korea.
See Table 1. Major U. Table I. Exports U. Imports Trade balance Total trade Economic Effects of a Korea-U. Free Trade Agreement. Korea Economic Institute, Special Studies 4. Feasibility and Economic Effects of a Korea-U.
Free Trade Agreements: | Globalization
Korean Institute for International Economic Policy. December International Trade Commission. Table 2. Department of Commerce, U. Increased economic interaction between the United States and South Korea has been accompanied by numerous disagreements over trade policies. In general, U. Many U. Another major cross-sectoral complaint is that rigidities in the South Korean labor market, such as mandatory severance pay, raise the cost of investing and doing business.
Finally, the United States and other countries have pressed South Korea to open further its agricultural market, which is considered one of the most closed among members of the Organization for Economic Co-operation and Development OECD. The intensity of these disputes has diminished considerably since the late s and early s, in part because South Korea enacted a set of sweeping market-oriented reforms as a quid pro quo for receiving a U. In particular, as a result of the reforms, South Korea opened its doors to foreign investors, ushering in billions of dollars of foreign portfolio and foreign direct investment FDI.
The result is that foreign companies, including U. Since the crisis, FDI commitments by U. Both sides credit the meetings, which appear to be unique to the U. Both governments saw in the FTA a logical extension of an already important economic relationship that would provide a means by which the two trading partners could address and resolve fundamental issues and, thereby, raise the relationship to a higher level.
For the United States these issues have included the high tariffs and other restrictions on agricultural imports. For South Korea, these difficult issues have included perceived U. While sharing some broad objectives, U. A primary objective of the United States was to gain access to South Korean markets in agricultural products, pharmaceuticals and medical equipment, some other high- technology manufactured goods, and services, particularly financial and professional services— areas in which U. For South Korea, gaining a large increase in market access was not as critical a priority since South Korean exporters already have a significant presence in areas in which they have proved to be competitive—consumer electronics and autos, for example, and in which they already face only low or zero U.
However, South Korea arguably did seek to preserve its share of the U. South Korea likely also aimed to improve its competitive position in the U.
Its main objective in securing an FTA with the United States was much broader than gaining reciprocal access to the U. Roh made an FTA the top economic priority for the remainder of his tenure, which expired in February Ongoing competitive pressure from Japanese firms, increased competition from Chinese enterprises, and the rapid ageing of the South Korean workforce has heightened the sense of urgency about boosting national competitiveness. Rather, they emphasized the medium and long-term gains that would stem from increased allocative efficiency of the South Korean economy, particularly in the services industries.
This would presumably be brought about by an influx of U. The absence of mirror-image or reciprocal U. Except for some provisions dealing with issues specific to U. This conclusion does not suggest that South Korea did not bring to the table its own specific demands, which it did such as the exclusion of rice and held to them firmly. Some issues, such as elimination of tariffs on most manufactured goods, were not very controversial and were dealt with in early stages of the negotiations.
Related The Proposed U.S.-South Korea Free Trade Agreement (KORUS FTA): Provisions and Implications
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