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Updated US-Korea FTA Signed by Moon, Trump
S. Korean President Moon Jae-In (left) and US President Donald Trump signs a new revised FTA in New York on Sept. 24, 2018.

After months of vigorous but respectful negotiations, an improved, updated Korea-U.S. Free Trade Agreement (KORUS FTA) was signed by South Korean President Moon Jae-in and U.S. President Donald J. Trump in New York on Sept. 24 (local time), 2018.

Korea and the United States have long enjoyed a robust trading relationship. In 2017, U.S. goods and services trade with Korea totaled an estimated $151.7 billion, including exports of $71.1 billion and imports of $80.6 billion. In that year – the latest for which accurate figures are available – Korea was the seventh largest importer of American goods and the sixth largest supplier of goods exported to the United States.

Stratfor, which analyzes global intelligence reports, notes that most “U.S. imports from South Korea are finished products that go to end consumers. The products include $16.4 billion worth of automobiles in 2016 and $7 billion in phones, representing about a third of U.S. imports from South Korea alone.” Meanwhile, Capital Press reported that the United States “is the largest supplier of beef to Korea and the second-largest pork supplier. U.S. red meat exports to Korea set a record last year of $1.7 billion, a 19 percent increase year over year and a 69 percent increase since 2012.”

Trade negotiations lead inevitably to some compromises, with each side gaining a portion of what it desired at the outset and each side conceding one point or another to its negotiating partner. The result can be interpreted in various perspectives but – certainly in the case of KORUS FTA – both teams rose from the bargaining table with good news to take home and confidence that the agreement will be mutually beneficial.

Wendy Cutler, who was a negotiator during talks leading to the original KORUS FTA under President George W. Bush, said the revised agreement “looks like a pretty classic negotiation, where they built on previous agreements,” noting that negotiators from the American side were “responsive to some of Korea’s concerns and then put on a bow on it.”

One point of contention that ended up resolved was over trade in automobiles and automotive parts. According to a Bloomberg report, Korea “agreed to double to 50,000 the number of cars each U.S. automaker can sell in Korea without meeting local safety standards. The two sides also agreed the U.S. wouldn’t re-impose tariffs on Korean cars.” (A 25 percent U.S. levy on pickup truck imports will be extended 20 years to 2041 from past its original 2021 expiration date.)

The newest version of the KORUS FTA was received with praise by leaders in the U.S. agriculture sector. Dale Moore, Vice President of Public Affairs for American Farm Bureau Federation, said, “We look at it as a win,” a view echoed by Beth Hughes, Director of International Affairs for the International Dairy Foods Association, who called it a “win-win for both countries.”

The amendments to the KORUS FTA run to 24 pages (in English), as published by the Office of the U.S. Trade Representative (USTR). While the ceremonial signing by the two presidents is an important step in the process, Korea requires public comment prior to legislative ratification. The agreement, with its amendments, has a target date of January 1, 2019, to be entered into force. Once realized, the new, improved KORUS FTA will lead to further strengthened trade and economic cooperation, mutual investment ties and will further contribute to consolidating a robust and comprehensive U.S.-Korea alliance.

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