BRINGING BENEFITS HOME: THE U.S.-KOREA FREE TRADE AGREEMENT
March 15, 2013 marked the one-year anniversary of the entry into force of the United States-Korea Free Trade Agreement – and that agreement is living up to its promise to provide tangible benefits for American businesses and workers. Two rounds of tariff cuts and eliminations have already taken place under the agreement and the agreement’s provisions to address non-tariff barriers are also supporting U.S. exports of goods and services:
More Exports to Korea of Made-in-America Manufactured Goods
U.S. manufacturing exports to Korea were up 1.3 percent from $34.3 billion in 2011 to $34.8 billion in 2012. Exports of transportation equipment have experienced a significant bump of nearly a billion dollars –up 24 percent to $5.0 billion. Sales of “Detroit 3” cars in Korea increased 18 percent, and overall U.S. passenger vehicle exports to Korea increased 48 percent. Exports of aircraft and parts also experienced gains of 34 percent – that’s $896 million in additional exports, to $3.5 billion total.
More Exports to Korea of Grown-in-America Agricultural Products
There were dramatic increases in U.S. exports of key agricultural products that benefited from the tariff cuts under the agreement. For example, exports of soybeans were up 48 percent to $395 million, and exports of wheat were up 38 percent to $645 million. U.S. orange juice exports to Korea jumped 130 percent, and grape juice exports were up 128 percent during that same time period. Exports of wine to Korea were up 57 percent, and exports of fresh fruits were up 46 percent to $370 million.
More Exports to Korea of Straight-from-America Services
U.S. private sector services exports to Korea experienced robust growth since the entry into force of the agreement, and were up 8.7 percent to $18 billion in 2012 (based on preliminary 2012 data from the Department of Commerce). Royalties and license receipts increased by 23 percent to $5.6 billion, and exports of travel services were up 11 percent to $4.1 billion. Due to the market- opening provisions in the agreement, 12 U.S. law firms have received approval to open offices in Korea, and U.S. service providers in sectors such as telecommunications, e-commerce, and international express delivery services are benefiting from the agreement.
As more provisions of this trade agreement come into effect, Americans will see even further benefits for U.S. exporters. By January 1, 2016, Korean tariffs on over 95 percent of exports of U.S. industrial and consumer goods to Korea will have been eliminated. The U.S. International Trade Commission estimates that when the agreement is fully implemented, the tariff cuts alone will boost U.S. goods exports to Korea by $10 billion above where they would have been without the agreement. This increase will support more jobs here at home.