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Washington – On the second anniversary of the United States – Republic of Korea Free Trade Agreement (KORUS), strong results are emerging as the agreement delivers new opportunities for American businesses and workers.
In the two years that this landmark agreement has been in effect, Korea has become the sixth-largest trading partner of the United States, exports of U.S. manufactured goods to Korea have increased, Koreans are buying more U.S. services than ever, and U.S. exports of a wide range of agricultural products have seen significant gains. KORUS has also improved Korea’s investment environment through strong provisions on intellectual property rights, services, and investment, supporting U.S. exports.
“Since the Korea agreement went into effect, U.S. exports to Korea are up for our manufactured goods, including autos, exports are up for a wide range of our agricultural products, and exports are up for our services. Millions are benefitting from the lower tariffs on U.S. exports as well as the progress being made to tackle non-tariff barriers blocking U.S. exports to Korea. While our trade balance has been affected by decreases in corn and fossil fuel exports, these changes are due to the U.S. drought in 2012 and change in Korea’s energy mix, both of which were unrelated to the agreement,” said Ambassador Froman. “Looking ahead, the United States will be working to ensure the full implementation of the agreement so that U.S. exporters are able to realize even more opportunities.”
Since entering into force on March 15, 2012, three rounds of tariff cuts and eliminations have taken place under the agreement: the first on the date of entry into force; the second on January 1, 2013; and, the third on January 1, 2014. Over two-thirds of U.S. agricultural exports are now entering Korea duty free. By January 1, 2016, Korean tariffs on over 95 percent of U.S. industrial and consumer goods exports to Korea will have been eliminated.
Slow economic growth in Korea between 2012 and 2013 dampened demand for imports, but Made-in-America manufactured goods still grew their sales in Korea by 3 percent, to $35.4 billion. While starting from a small base, overall U.S. passenger vehicle exports to Korea increased 80 percent compared to 2011, and sales of “Detroit 3” vehicles are up 40 percent. Exports of services to Korea increased an estimated 18.5 percent between 2011 and 2013, to an estimated $19.4 billion. There were also dramatic increases in U.S. exports of key agricultural products that benefit from reduced tariffs under KORUS, including dairy, wine, beer, soybean oil, fruits and nuts, among many others.
The Committees and Working Groups established under KORUS, including the Ministerial-level Joint Committee, succeeded in addressing a range of implementation issues that have arisen over the past two years. We continue to work with our Korean counterparts in areas where concerns remain, such as autos and customs, and are committed to resolving these issues in order to deliver the full benefits of KORUS.
President Obama has made trade agreements that support jobs and raise standards a keystone of his economic agenda. As KORUS continues to be implemented, the administration will work to ensure that the agreement continues to benefit the American middle class.
For more information on KORUS, please click here.