KORUS FTA FACTS AND FIGURES TRADE WORKS: A ONE-YEAR REVIEW

KORUS FTA FACTS AND FIGURES
TRADE WORKS: A ONE-YEAR REVIEW
One-Year Key Trade Statistics
U.S. Exports to Korea
FTA Beneficiary Items
FTA Non-beneficiary Items
U.S.-Korea Total Trade Volume
MARCH 15, 2012 - FEBRUARY 28, 2013
Korea Exports to the U.S.
$39.9 billion (-9.1%)
$20.7 billion (+4.1%)
FTA Beneficiary Items
$19.1 billion (-20.1%)
$57 billion (+1.4%)
$22.4 billion (+10.4%)
FTA Non-beneficiary Items
$34.6 billion (-3.6%)
*Year-on-year growth rates shown in parentheses
$96.9 billion
Source: Korea Customs Service
Bilateral U.S.-Korea Trade Trend
(in billions of dollars)
$70
$61.9
$60
Billion USD
$50
$40
$38.5
$45.0
$48.1
$62.7
$55.1
$49.9
U.S. Exports of
Services to Korea
$42.9
$30
U.S. Exports of
Goods to Korea
$20
$10
2005
2006
2007
2008
2009
2010
2011
2012
Source: United States Department of Commerce: Bureau of Economic Analysis
Goods
In the first year under the U.S.-Korea Free Trade Agreement
(KORUS FTA), Korea and the United States have shown positive
growth for items that receive tariff reductions. In particular,
the United States saw growth in its auto, transportation and
chemical industry exports. Additionally, a large number of
agricultural products including oranges and cherries saw
significant increases.
“One year in, I am pleased to see that the U.S.Korea trade agreement is already producing
promising results for U.S. businesses and
workers in America’s factories, farms and
firms.”
— Demetrios Marantis,
Acting U.S. Trade Representative
Services
March 15, 2013
The U.S. services trade surplus to Korea increased 8.9 percent in
2012 compared to 2011.
• U.S. export of services to Korea (2012): $18.2 billion
• Korea export of services to the U.S. (2012): $12 billion
Services represent a large portion of both the U.S. and
Korean economies: 78 percent (U.S.) and 58 percent (Korea).
KORUS FTA Utilization Rate
The KORUS FTA’s utilization rate has grown steadily since
its implementation. As of February 2013, 62.1 percent of U.S.
exports to Korea and 69.6 percent of Korean exports to the
U.S. have benefited from the KORUS FTA.
www.USKoreaConnect.org • The Embassy of the Republic of Korea
U.S.–Korea Export Beneficiary Items by Industry
Since its implementation in March 2012, we have already seen the KORUS FTA’s positive impact on goods and services that
receive preferential treatment under the agreement. We call these goods and services “beneficiary items.” Under the KORUS
FTA, almost 80 percent of U.S. consumer and industrial exports to Korea became duty free on March 15, 2012, and nearly 95
percent of bilateral trade in consumer and industrial products will become duty free within five years of implementation. Most
remaining tariffs will be phased out within 10 years, which will amplify the positive effects on the trade of beneficiary items.
Additionally, the KORUS FTA provides unprecedented access to the Korean marketplace for American service providers. The
boxes below show how the KORUS FTA has affected trade in several beneficiary industries.
For all beneficiary items listed below, tariff rates represent those applied before the KORUS FTA entered into force. Note that the elimination
schedule for each item takes effect with the agreement.
* Increases represent year-on-year growth between March 2011-February 2012 and March 2012-February 2013.
AGRICULTURE
Statistics
• The KORUS FTA eliminated duties on almost twothirds of U.S. agricultural exports to Korea, expanding
opportunities for many farm products.
• In 2012, the United States exported $5.9 billion in
agricultural and food products to Korea, the United
States’ 5th largest export destination for farm products.
• In 2012, Korea became the largest export market for U.S.
oranges, accounting for nearly one-third of total U.S.
orange exports by value.
Beneficiaries
• Soybeans
Both out-of-quota tariff (487%) and in-quota tariff (5%) were
eliminated immediately for soybean oil and oil cake (for all
soybeans, 130% increase*)
• Oranges (fresh)
50% tariff (Sept.-Feb.) eliminated immediately (out-of-quota
remains at 50%); 30% tariff (Mar.-Aug.) being eliminated over
7 years (19.5% increase*)
• Almonds
8% tariff eliminated immediately (68.9% increase*)
• Cherries (fresh)
24% tariff eliminated immediately (87.1% increase*)
• Potatoes (prepared or frozen)
18% tariff eliminated immediately (34.4% increase*)
• Cheese (e.g., mozzarella, cream cheese)
36% tariff being eliminated over 15 years (0% tariff applied for
quantity less than 7,000t) (131.1% increase*)
• Lemons
30% tariff eliminated immediately (53.1% increase*)
• Pork bellies (e.g., bacon)
30% tariff being eliminated over 3 years (209.8% increase*)
AUTOS
Statistics
• Under the KORUS FTA, Korea continues to open its
automotive market to imports.
• According to the U.S. Department of Commerce, U.S.
exports of passenger vehicles to Korea increased 48 percent
from 2011 to 2012, and 283 percent from 2009 to 2012.
Beneficiaries
•
•
•
Passenger motor vehicles
8% tariff being eliminated by 2016 (49.8% increase*)
Gear boxes for motor vehicles
8% tariff eliminated immediately (227.9% increase*)
Safety seat belts for motor vehicles
8% tariff eliminated immediately (74.6% increase*)
CHEMICALS
Statistics
• U.S. companies are well-positioned to take advantage of
improved market access in Korea, making their chemical
products more cost competitive and allowing firms to
reinvest in technology and product improvements.
• In 2012, the United States exported $6.9 billion in
chemicals to Korea.
• Korea is the U.S. chemical industry’s 7th largest export
market.
Beneficiaries
•
•
Hexamethylenediamine and its salts
6.5% tariff eliminated immediately (64.2% increase*)
Diols
5.5% tariff eliminated immediately or being eliminated over 10
years (92.5% increase*)
• Mono alkyl ethers of ethylene glycol (e.g., for paints)
5.5% tariff eliminated immediately (33% increase*)
Left photo: U.S. cherry exports increased by more than 87% in the first year under the KORUS FTA.
Right photo: The Elantra is one of two Hyundai models produced by Hyundai Motors
Manufacturing Alabama in Montgomery, AL.
www.USKoreaConnect.org • The Embassy of the Republic of Korea
PLASTICS
SERVICES
Statistics
• The plastics industry, one of the U.S. economy’s largest and
fastest growing industries, will benefit under the KORUS
FTA, which eliminates nearly all tariffs on U.S. plastic
products going into Korea within five years.
• In 2012, the United States exported $218.5 million in
plastics to Korea.
• Korea is the 10th largest market for the U.S. plastics
industry.
Facts
• U.S. service providers in sectors such as telecommunications,
e-commerce and international express delivery are benefitting
from the agreement.
• In 2012, there was $30.2 billion in two-way trade of services
between Korea and the United States.
• The provisions of the KORUS FTA grant U.S. law firms access
to practice in Korea. As of May 2013 more than 10 U.S. law
firms had opened offices in Korea with many others planning
to follow suit.
Beneficiaries
•
•
•
•
•
Cellulose acetates (nonplasticized)
5% tariff being eliminated over 3 years (38.8% increase*)
Polysulfides and polysulfones
6.5% tariff eliminated immediately (49.8% increase*)
Amino-resins
6.5% tariff eliminated immediately (18.7% increase*)
Plastic carboys, bottles and flasks
6.5% tariff eliminated immediately (93.2% increase*)
Plastic doors, windows and their frames
6.5% tariff eliminated immediately (92.8% increase*)
INVESTMENT**
Statistics
• U.S. foreign direct investment (FDI) in Korea was $3.7
billion (317 instances) in 2012.
• Korea’s FDI in the United States was $6.9 billion (1,156
instances) in 2012.
U.S.-Korea Crossborder Investment (cumulative)
MANUFACTURING & MACHINERY
$64.3 billion
U.S. Investment to Korea
$49.8 billion
Billion USD
Statistics
• The KORUS FTA gives manufacturing and machinery
companies across the United States a better chance to
compete in Korea’s dynamic marketplace by reducing
tariffs and making it easier to export goods.
• In 2012, the United States exported $14.2 billion in
machinery and electrical machinery to Korea.
Korean Investment to the U.S.
2007 2008 2009 2010 2011 2012
Beneficiaries
• Parts for turbojets and turbopropellers
3% or 8% tariff eliminated immediately or being eliminated
over 3 years (63.1% increase*)
• Electric generators
8% tariff eliminated immediately (27.9% increase*)
• Air or gas pumps, compressors and fans
8% tariff eliminated immediately or being eliminated over 3
years (72.3% increase*)
• Navigational instruments and appliances
8% tariff eliminated immediately (85.3% increase*)
• Pumps for liquids
8% tariff eliminated immediately or being eliminated over 3
years (34.3% increase*)
** All investment figures are on a “notification basis as reported.”
INTELLECTUAL PROPERTY
Facts
• For copyrighted works, the KORUS FTA extends Korean
copyright protections from life of the author plus 50 years
to life of the author plus 70 years, and protects temporary
copies of copyrighted work on the internet.
• For patents, the KORUS FTA provides an extension of
patent terms for undue delays in granting the original
patent.
• For trademarks, the KORUS FTA deters intellectual
property rights violators from shipping counterfeit
products through Korean ports and free trade zones with
new customs enforcement rules.
www.USKoreaConnect.org • The Embassy of the Republic of Korea
FTA Economies vs. Non-FTA Economies
Despite the challenging global economic climate in 2012, Korea’s trade continued to grow with countries with which it
has free trade agreements (FTAs). Korea’s FTA partners saw a 1.1 percent increase in trade volume between 2011 and
2012, while the trade volume with non-FTA countries decreased by 2.2 percent over the same period. As of 2012, Korea
had FTAs in effect with the United States, the Association of Southeast Asian Nations (ASEAN), the European Union,
Chile, the European Free Trade Association (EFTA), India, Peru and Singapore. Through its numerous FTAs, Korea has
created a stable and transparent trading and investment environment connecting its trading partners around the globe.
The chart below provides additional detail on Korea’s trade with FTA and non-FTA countries.
(in millions of dollars)
Worldwide
2011
2012
Export
555,214
548,309
Import
524,413
1,079,627
Trade Volume
FTA Countries
% Change
2011
2012
-1.2%
201,957
204,502
519,479
-0.9%
164,993
1,067,789
-1.1%
366,950
Non-FTA Countries
% Change
2011
2012
% Change
1.3%
353,257
343,808
-2.7%
166,626
1.0%
359,420
352,853
-1.8%
371,128
1.1%
712,677
696,661
-2.2%
Source: Korea Customs Service
Small and Medium Enterprises
Small and medium enterprises from the United States and Korea, representing
a variety of industries, are benefitting from the KORUS FTA. U.S. Korea
Connect continues to gather success stories from small and medium sized
companies that are taking advantage of the KORUS FTA and expanding their
businesses. These success stories are available on the USKoreaConnect.org
website and in Trade Works, our recently-released compendium of KORUS
FTA business success stories.
Six companies featured in Trade Works provided testimonials to the United States
International Trade Commission (USITC) as it prepared a report titled U.S.-Korea Free
Trade Agreement: Effects on U.S. Small and Medium-Sized Enterprises. The companies
accounted for 40 percent of the report’s testimonials and represented industries that
included agriculture, wine, manufacturing and services.
Published in May 2013, the report concluded that, “most respondents expressed the belief
that the FTA had already proven helpful and would benefit their companies even more
over time.” The full report can be viewed at: http://www.usitc.gov/publications/332/
pub4393.pdf
Get Connected
U.S. Korea Connect’s LinkedIn, Facebook and Twitter groups help businesses
connect and learn more about taking advantage of the KORUS FTA. As a member
of our online communities, you’ll have exclusive access to data, research and
events on trade between the United States and Korea.
Visit www.USKoreaConnect.org/Business-Connect to connect, collaborate
and succeed.
Contact Us
Please visit our website at
www.USKoreaConnect.org
for information on how to
contact the Embassy of the
Republic of Korea.
All figures in U.S. dollars. Information based on data from the U.S. Department of Agriculture, U.S. Census Bureau, U.S. Department of Commerce: Bureau of Economic
Analysis, Ministry of Knowledge Economy of Korea, Export-Import Bank of Korea, the CIA World Factbook, Society of the Plastics Industry, Korea Customs Service, the
United States Trade Representative and the United States International Trade Commission.
Last updated: June 2013.
www.USKoreaConnect.org • The Embassy of the Republic of Korea
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