Historic trade accord reached
U.S. Deputy Trade Representative Karan Bhatia, left, and South Korea’s Trade Minister Kim Hyun-chong, right, walk into a joint news conference to announce a free trade agreement yesterday. [NEWSIS]
The two leaders of the negotiations, Kim Hyun-chong, trade minister for Korea, and Karan Bhatia, deputy U.S. trade representative, announced yesterday afternoon an accord on the largest free trade agreement ever for Korea and the biggest deal for the U.S. since 1993.
The Korea-United States Free Trade Agreement brings the world’s largest economy into a deal with the 11th largest economy and one of the shining economic success stories of the last 50 years.
The Korean government is expecting exports to the United States to increase by up to $19 billion and imports to rise some $10 billion once the deal is implemented.
Kim and Bhatia said during their final press conference that the United States would abolish tariffs on all Korean items eventually and that Korea would allow more than 99 percent of American goods into the country tax-free.
The sensitive areas remained hard to settle up to the very last minute, but the two sides succeeded in finding a bottom line after extending the proposed deadline three times.
The United States wanted Korea to fully open its market to U.S. beef. Both sides agreed to consider the decision of the World Organization for Animal Health when Korea decides to fully resume beef imports. The U.S. wanted a written pledge, while Korea would only give oral promises. The U.S. gave in. Korea agreed to end the 40 percent tariff on beef over a 15-year period.
Rice was excluded in the pact. The United States also allowed Korea to continue levying a tax on oranges for the next seven years. After this, the tax will only apply during the harvest season for Korean tangerines.
The two governments also concurred in automobiles. Korea agreed to simplify its automobile tax levy system and both sides will immediately allow passenger cars with engines below three liters to be traded duty-free.
Cars bigger than that will have a three-year probation time. Pick-ups trucks must wait 10 years before a 25 percent tariff is abolished.
America will drop its current 61 percent tariff on Korean textiles, even if made with imported yarn.
The Kaesong Industrial Complex issue was settled by agreeing to establish a Committee on Outward Processing Zones on the Korean Peninsula. Korea and the United States will cooperate, not just on Kaesong, but on any area that can be designated for products to be considered South Korea-made.
The National Assembly may not ratify the pact until next year which would let the agreement take effect no earlier than 2009.
By Hwang Young-jin Staff Writer [yhwang@joongang.co.kr]
with the Korea JoongAng Daily
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