Manufactured goods account for more than 80 percent of U.S. exports to South Korea – reaching a record $32 billion in 2010. Between 2008 and 2010 the top five U.S. industrial goods export sectors to South Korea were information technology, chemicals, metals and ores, machinery, and aerospace.
The U.S.-South Korea trade agreement creates new opportunities for U.S. manufacturers seeking to export to South Korea, giving American manufacturers more market access in two ways: (1) by eliminating tariffs, or duties, charged when U.S. exports come into South Korea, and (2) by laying out a framework to address other barriers to U.S. exports – including those that may arise in the future.
South Korea’s average tariff on industrial goods is considerably higher than the average U.S. tariff: 6.2 percent compared to 2.8 percent. In certain key sectors, such as medical equipment and aircraft equipment, South Korean goods enter the United States duty-free today while South Korea maintains tariff rates as high as 8 percent on U.S. products. The agreement’s elimination of high South Korean tariffs will open new opportunities for U.S. exports.
More than 95 percent of U.S. exports of industrial and consumer goods to South Korea – including aerospace, automotive, building products, consumer goods, electrical equipment, environmental goods, information and communications technologies, metals and ores, paper and paper products, scientific equipment, shipping and transportation, and wood and lumber – will gain duty-free access to the South Korean market within five years of entry into force of the agreement.
Beyond tariffs, the agreement establishes strong new rules on how South Korea can develop product standards with regard to U.S. manufactures. Under the agreement, American manufacturers and others will have greater input into the process, and to participate on equal terms with South Korean companies in the development of South Korean standards, technical regulations, and conformity assessment procedures. This will be important for all U.S. exporters, but this new level of transparency and input will especially benefit small and medium-sized enterprises that often do not have enough resources on their own to overcome the export challenges that foreign regulations can present.
The agreement’s intellectual property rights provisions contain state-of-the-art protections for intellectual property with protections for patents, trademarks, and copyrights – critically important for U.S. industry’s knowledge-based manufactured goods such as semiconductors and other information technology products, aerospace equipment, and medical devices, to name just a few.