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Policy Brief 10-23

Prospects for Implementing the Korea-US Free Trade Agreement

by Jeffrey J. Schott, Peterson Institute for International Economics

October 2010


The KORUS FTA was signed on June 30, 2007, but has not yet been sent to Congress for ratification. US concerns about auto and beef trade are the main stumbling blocks. At the Toronto G-20 Summit in June 2010, Presidents Obama and Lee Myung Bak tasked their officials to find solutions by the November Seoul G-20 Summit. If a deal is struck, implementing legislation could be submitted to Congress in early 2011.

This paper assesses the problems and potential solutions to these problems and options for legislative action. The author concludes that, once submitted, the KORUS FTA will be approved for three reasons—all related to actions taken by other countries that could adversely affect US commercial and security interests in the Asia-Pacific region. The first reason is to demonstrate support for a strong ally facing North Korean aggression. Neither country wants to let a few provisions in a major trade agreement create friction in a strategically important bilateral alliance. The second reason is to secure a level playing field for US exporters in the Korean market. The imminent signing of the Korea-EU FTA, an agreement modeled on and largely comparable to the KORUS FTA, increases the urgency of Congressional action on the KORUS FTA since US and EU exports compete for sales in the Korean market. The third reason relates to the ability of US officials to advance US economic interests through an effective trade policy. Implementing KORUS is important to help maintain the credibility of US trade initiatives that seek to boost US exports, constrain Chinese economic influence in the Asia-Pacific region, and advance overall US foreign policy and security interests.

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RELATED INTERVIEWS

US-Korea FTA: Some Progress But No Deal November 12, 2010

The US-Korea Trade Pact: Assessing the Impact December 7, 2010


RELATED LINKS

Op-ed: Congress and the KORUS FTA November 8, 2010

Book: Witness to Transformation: Refugee Insights into North Korea January 2011

Peterson Perspective: North Korea's Immunity to Outside Pressure: Part I December 12, 2012

Policy Brief 10-1: The Winter of Their Discontent: Pyongyang Attacks the Market January 2010

Working Paper 10-2: Economic Crime and Punishment in North Korea March 2010

Paper: FTAs and the Future of US-Korean Trade Relations November 2009

Paper: Implementing the KORUS FTA: Key Challenges and Policy Proposals February 2008

Policy Brief 08-6: North Korea on the Precipice of Famine May 2008

Policy Brief 07-7: The Korea-US Free Trade Agreement: A Summary Assessment August 2007

Policy Brief 06-4: Negotiating the Korea–United States Free Trade Agreement June 2006

Working Paper 07-7: North Korea’s External Economic Relations August 2007

Book: Avoiding the Apocalypse: The Future of the Two Koreas June 2000

Book: Free Trade Between Korea and the United States? April 2001

Working Paper 08-4: Migration Experiences of North Korean Refugees: Survey Evidence from China March 2008