Free trade pact with South Korea may be most significant in 10 years

WASHINGTON – The United States has concluded a free-trade agreement with the Republic of Korea, making it the latest such agreement reached under the president’s trade-promotion authority, the Office of the U.S. Trade Representative announced April 2.
Deadline. The agreement was concluded April 1, the last day trade-promotion authority allows the president to submit free-trade agreements to Congress for an up or down vote, without amendments.
Congress will have 90 days to consider the agreement before trade-promotion authority expires June 30.
With the pending expiration of trade-promotion authority, also called fast-track authority, the United States does not plan to start any new free trade agreement negotiations, said Sean McCormack, state department spokesman.
Fast-track authority was granted to President Bush in 2001, when the House of Representatives was controlled by Republicans.
With Democrats now in control in Congress, renewal of trade-promotion authority is uncertain.
Significant. The Korea free trade agreement is the “most commercially significant” free-trade agreement the United States has reached in more than 10 years, or since the North American Free Trade Agreement, according to an Office of the U.S. Trade Representative press release.
The negotiations that led to the U.S.-Korea free trade agreement demonstrate “that two countries with large, complex and dynamic economies, and a tradition of robust public involvement can work through challenges and craft a high-quality free trade agreement,” said Deputy U.S. Trade Representative Karan Bhatia.
South Korea is the world’s 10th-largest economy and the United States’ seventh-largest trading partner. The United States is Korea’s third-largest market.
Two-way trade in goods between the two countries carried an estimated value of $72 billion in 2006, the trade office said.
Expansions. When implemented, the United States-Korea Free Trade Agreement would expand trade and investment flows between the two countries across a comprehensive list of economic sectors including agriculture, industrial and consumer products, automobiles and textiles.
The agreement also would further enhance the U.S.-Korea partnership that has been “a force for stability and prosperity in Asia,” Bush said in an April 2 statement.
U.S. business groups have urged swift adoption of a U.S.-Korea free trade agreement, which had been in negotiations for 10 months.
Under the agreement, more than $1 billion worth of U.S. farm exports to Korea would become duty-free immediately and most remaining agricultural tariffs would be phased out over the first 10 years after the agreement is enacted.
More than 90 percent of bilateral trade in industrial and consumer goods would become duty-free in three years after enactment with remaining tariffs eliminated within 10 years.
Provisions. The agreement would eliminate Korea’s engine displacement-based tax system for imported cars.
The United States said that system discriminates against U.S.-made autos, which generally are larger than domestically produced Korean cars.
The pact also would ensure that U.S. investors in Korea have the same rights as Korean investors and that intellectual property rights are protected.
It would require both the United States and Korea to enforce their environmental and labor laws and would establish mechanisms for enhancing cooperation in safeguarding labor rights and environmental protections.