After five years of negotiations, inside and outside of the United States, the U.S. and South Korea Free-trade agreement (FTA), also known as KORUS, has completed the last step in its approval. U.S. Trade Representative Ron Kirk announced on Tuesday, that the KORUS FTA will be implemented on March 15.
The U.S. Congress approved the trade pact in October, which followed approval by the South Korean parliament on Nov. 22, 2011. However, some industry and agricultural interests in both countries, but especially South Korea, continued to have issues with the FTA. In fact it may still face hurdles in South Korea, where the opposition party has said it will try to repeal it.
Analysts watching those developments, however, tend to think such rhetoric is political in nature and that repealing the pact would actually be costly economically and politically.
This final step follows months of detailed technical talks to ensure that each side has made all the legal and regulatory changes required under the agreement. The South Korean Ministry of Foreign Affairs and Trade said the government will take the necessary steps to "maximize benefits" that South Korean companies and the general public can have through the FTA’s implementation.
According to Kirk, KORUS should support tens of thousands of U.S. jobs and help achieve the Obama administration's goal of doubling exports by 2015.
Korea has a $1 trillion economy and access to that market will open up opportunities for America's farmers and ranchers, businesses and workers. It also “will strengthening our economic partnership with a key Asia-Pacific ally," Kirk said in a statement.
The deal will eliminate South Korea’s duties on almost 80 percent of U.S. industrial products and almost 67 percent of U.S. farm goods on its first day of implementation. For U.S. pork, complete implementation will take a bit longer.
"NPPC is pleased that the KORUS FTA will take effect," say National Pork Producers Council officials. "A zero terrif rate on most products will going into South Korea will be effective Jan. 1, 2014." U.S. pork products have significant tariffs on them-- 25 percent on frozen product and 22.5 percent on fresh or chilled pork. Under the KORUS FTA, tariffs would be eliminated on all U.S. frozen pork and some processed frozen pork by Jan. 1, 2016. Fresh-chilled pork would be duty-free within 10 years after implementation, NPPC notes.
Analysts forecast that KORUS will expand the $90 billion two-way trade relationship by 10 percent within five years. Trade accounts for more than half of South Korea's economic output.