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Policy Brief 06-4

Negotiating the Korea–United States Free Trade Agreement

by Jeffrey J. Schott, Peterson Institute for International Economics
and Scott C. Bradford, Peterson Institute for International Economics
and Thomas Moll, Peterson Institute for International Economics

June 2006


Difficult and sensitive issues will command the attention of US and Korean officials as they negotiate a bilateral free trade agreement (FTA). The United States will have to put long-standing US barriers to Korean exports of textiles, apparel, and steel on the table and resolve problems with South Korean access to the US visa waiver program. In turn, South Korea will have to open new opportunities for US goods and services, including autos, beef, and rice. Such a deal will pose a stiff political challenge for Korean officials. However, they will be under pressure in any event to reform their farm programs--either in the context of a final deal in the WTO talks or in response to Chinese initiatives in the region, which Korea will need to match. Both Korea and the United States also have important foreign policy interests in the FTA, particularly enhanced security on the Korean peninsula. South Korea would like the FTA to promote the policy of constructive engagement with North Korea, which the former has been pursuing by extending trade preferences to goods produced in the Kaesong industrial complex in North Korea. However, such a request would put the entire negotiation in jeopardy since the US Congress would reject preferences for the North Korean regime.

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RELATED LINKS

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

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