Summary of S. Korea-US free trade agreement
Seoul, April 2 2007 (Yonhap News)
The following is a summary of the free trade agreement (FTA) reached between South Korea and the United States Monday.
1. Both sides agree to abolish about 94 percent of tariffs on commodities within three years after the FTA goes into effect, and scrap all tariffs on traded goods over time.
In the case of automobiles, the U.S. will immediately abolish tariffs on passenger cars with an engine capacity of below 3,000 cc and auto parts. Tariffs on automobiles with an engine displacement of 3,000 cc or more will be abolished in three years.
In return, South Korea will overhaul its auto-related tax scheme under which a flat special excise tax of 5 percent is levied on automobiles. South Korea will also streamline its auto-related taxation scheme.
2. Both sides agree to establish the "Committee on Outward Processing Zones on the Korean Peninsula" which designates outward processing zones on the peninsula under some conditions. Products made in the inter-Korean industrial complex in the North Korean border city of Kaesong are expected to be treated as South Korean-made goods.
3. The United States will immediately abolish 61 percent of tariffs on textiles and garments in terms of its import value, and exclude South Korea’s major textile export items such as men’s shirts and women’s jackets from the yarn-forward rule of origin.
4. Both sides agree to exclude rice on their concession lists.
South Korea will maintain current tariffs on oranges, beans, powdered milk and other imported agricultural products.
Also, South Korea will maintain safeguard measures and a tariff rate quota (TRQ) on such goods as pork, beef and other agricultural products.
5. Both sides agree to establish a trade dispute settlement body.
They also agree to have a consultation prior to inquiries or probes regarding trade disputes, and suspend inquiries or probes if they settle the dispute.
6. South Korea will not open such public services as education and medical care. But it will push to open accounting, law and broadcasting services in a phased manner. Restrictions on Hollywood movies will be maintained, requiring local theaters to run domestic movies for at least 73 days a year.
7. South Korea will not guarantee the minimum price of new U.S. drugs. Seoul will introduce a system that calls for assessing the violation of patents when it reviews applications by local drugmakers for the sale of copied drugs.
8. Both sides agree to establish a body that deals with the Sanitary and Phytosanitary (SPS) issues. But they agree to carry out scientific assessment of any SPS-related risks and carry out technical consultation before the body gets involved in the issues.
9. Both sides agree to allow each other’s experts to get involved in setting and ironing out technical barrier to trade (TBT)-related standards.
Also, they agree to inform each other of formulating new TBT-related standards, thus providing each other a chance to come up with opinions on them.
10. Both sides agree to clarify criteria for indirect expropriation in investor-to-state dispute (ISD) cases. The two also agree on excluding "appropriate" state policies such as public health, environment, security and housing price stabilization from indirect appropriation.
11. Both sides agree to introduce a temporary safeguard measure which controls sudden and massive capital outflows in case of financial crisis. South Korea’s state-run financial institutions such as Korea Development, Industrial Bank of Korea and Korea Housing Finance Corp. are not on the list of the financial sector’s agreement.
12. South Korea will maintain regulations that bar foreign investors from owning more than 49 percent of the country’s major telecommunications firms that provide core networks and services.
13. The two sides agree to extend their copyright protection period from 50 to 70 years after the author’s death, but the agreement will go into effect two years after the implementation of the FTA.
14. The two sides agree to improve the level of each other’s labor-related laws and their implementations. The labor communities in the two nations are allowed to raise issues on the labor laws.
15. The two sides agree to make efforts for high-level environmental protection and abide by environmental laws. The two also agree on not damaging the environment as part of their bid to facilitate trade and investment.
Summary of S. Korea-US free trade agreement