CRS Report for Congress: The proposed South Korea-US Free Trade Agreement (KORUSFTA)
CRS Report for Congress
The Proposed South Korea-U.S. Free Trade Agreement (KORUSFTA)
May 24, 2006
Mark E. Manyin
Specialist in Asian Affairs
Foreign Affairs, Defense, and Trade Division
William H. Cooper
Specialist in International Trade and Finance
Foreign Affairs, Defense, and Trade Division
Congressional Research Service
The Library of Congress
Washington DC
Summary
On February 2, 2006, United States Trade Representative (USTR) Robert
Portman and South Korean Trade Minister Kim Hyun-chong, announced their two
countries’ intention to negotiate a Korea-U.S. free trade agreement (KORUSFTA).
The announcement came after many years of official and unofficial discussions of the
feasibility of concluding an FTA. The reaction to the announcement of the launching
of the KORUSFTA negotiations has ranged from bipartisan support to some
skepticism and opposition.
The Congress would have to approve an FTA before it could enter into force.
The KORUSFTA negotiations will be conducted under the trade promotion authority
(TPA) that the Congress granted to the President under the Bipartisan Trade
Promotion Act of 2002 (P.L.107-210). The authority allows the President to negotiate
trade agreements that would receive expedited congressional consideration (no
amendments and limited debate). However, the TPA is due to expire July 1, 2007,
placing tight time restrictions on the negotiations.
The launching of the negotiations comes with a high degree of political risk for
both South Korea and the United States. It comes as the U.S.-South Korean alliance,
while remaining very strong, has showed signs of fraying. Some observers assign
importance to the negotiations beyond just commercial considerations and assert that
the FTA would help to shore up the alliance. On the other hand, failure of the
negotiators to reach an agreement could damage the relationship for some time. The
fact that the two sides have agreed to launch the talks despite the risks would seem
to indicate a degree of mutual trust and expectation of success.
Each country enters the negotiations with some key objectives. The United
States will seek, among other goals, reduction or elimination of South Korean
restrictions on agriculture imports, resolution of issues affecting auto trade, and
reduction in South Korean barriers to foreign investment. In addition, the United
States will encourage stronger South Korean government enforcement of intellectual
property rights and discussion of and changes to competition policies that discourage
foreign business activity in South Korea. South Korea will probably seek FTA
preferential treatment for goods produced by South Korean firms in the Kaesong
industrial zone in North Korea, the inclusion of South Korean residents in the U.S.
visa waiver program, discussion of U.S. antidumping policies and practices, and
reduction of U.S. restrictions on maritime services trade. A number of these issues
could prove to be contentious during the negotiations.
South Korea is the seventh largest U.S. trading partner, and the United States
is South Korea’s third largest trading partner. The KORUSFTA would be the second
largest FTA in which the United States is a participant and the largest in which South
Korea is a participant, representing a major step for both countries in their pursuit of
their respective trade strategies. These negotiations could have repercussions beyond
the bilateral relationship as well. This report will be updated as events warrant.
