The Korea-US FTA, which took effect on March 15, 2012, not only reduced tariffs, but also expanded the market between the two countries through product diversification. KOTRA (President Jeong-yeol Yoo) announced on the 14th that it had published ‘Effects and Use Cases of the 10th Anniversary of the Korea-US FTA’ to analyze the performance of the KORUS FTA, which celebrated the 10th anniversary of its entry into force on the 15th. This is the result of in-depth interviews with Korean importers and exporters at 7 trade centers in the United States, including Washington, Los Angeles, and Detroit.
Korea’s trade with the US has steadily increased since the KORUS FTA took effect, and it was confirmed that both countries are benefiting from the FTA. The total amount of trade in goods between the two countries increased by regarding 67.8% over the past decade. First, Korea’s exports to the US increased by 70.6% from US$56.2 billion in 2011 to US$95.9 billion in 2021, showing that the effect of expanding exports was significant. Imports also increased by 64.3% over 10 years from $44.5 billion in 2011 to $73.2 billion in 2021.
The evaluation of the Korea-US FTA in the US is also positive. The KORUS FTA played a pivotal role in strengthening the bilateral relationship, and it is in an atmosphere of emphasizing the importance of future-oriented partnerships in Korea-US relations, including supply chain recovery and technological innovation beyond trade.
It was found that US buyers and exporters actively utilized the Korea-US FTA in the context of △ strengthening price competitiveness of Korean products through tariff abolition △ diversification of import sources following the US-China trade dispute △ diversification of trade and consumption items following COVID-19.
Most US buyers and exporters said that the tariff reduction effect of the KORUS FTA acted as a positive factor in expanding business with Korea. Company W, which imports Korean makgeolli, has been burdened with a tariff of 3 cents per liter, so it has not imported Korean products. Buyer Z, which imports Korean drive axles, also said that the abolition of tariffs as soon as the FTA took effect was an important factor in deciding to import Korean products.
There was also a case of increasing imports from Korea following a high tariff of up to 25% was imposed on Chinese products due to the US-China trade dispute. Company L, which was importing machinery parts from China, said that duty-free tariffs on Korean products were a decisive factor in the transaction in the process of finding new suppliers due to the tariff problem caused by the US-China trade dispute. Immediately following the FTA took effect, interest in high-quality Korean products continued to expand, but it did not immediately lead to Korean imports. It turns out that this transaction is the first transaction with Korea.
COVID-19, which has changed our daily lives, has also been shown to have an impact on the use of the Korea-US FTA. In the early days of the COVID-19 outbreak, when the demand for personal hygiene products surged, the tariff-free benefits of the FTA acted positively for transactions. Company J, which imports Korean hand sanitizer, and Company L, which imports masks, both announced that they have decided to import Korean products that have secured price competitiveness compared to Chinese and Vietnamese products with duty-free benefits. In addition, Company F, a US camping car exporter, said that as overseas travel was restricted due to Corona 19, camping car exports to Korea increased by taking the opportunity to increase camping demand in Korea. He added that tariff-free also became a positive factor for exports to Korea.
Meanwhile, US buyers and exporters need government-level support for active promotion of Korean products, certification, and proof of origin, and have ordered to prepare countermeasures once morest the recent logistics crisis and still higher prices compared to Chinese products.
Kim Tae-ho, head of KOTRA’s Economic and Trade Cooperation Headquarters, said, “During the 10 years of the Korea-US FTA, we have confirmed the mutually beneficial results of expanding trade, investment, and consumer choice between the two countries. I will support you,” he said.
Reporter Jeon Yeo-song (lawissue) [email protected]
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