The Proposed South Korea-U.S. Free Trade Agreement(KORUS FTA)
On June 30, 2007, trade officials representing the United States and South Koreasigned the U.S.-South Korean Free Trade Agreement (KORUS FTA). Thenegotiations leading to the free trade agreement (FTA) covered a wide range of subjects, including a number of sensitive issues — autos, agriculture, trade remedies,among others — that have plagued the U.S.-South Korean trading relationship fordecades and these subjects are reflected in the final text of the agreement.Congress will have to approve implementation legislation for the KORUS FTAbefore it can enter into force. The negotiations were conducted under the tradepromotion authority (TPA), also called fast-track trade authority, that the Congressgranted the President under the Bipartisan Trade Promotion Act of 2002 (the Act)(P.L. 107-210). The authority allows the President to enter into trade agreements thatreceive expedited congressional consideration (no amendments and limited debate).The White House has not indicated when it will send the draft implementinglegislation to Congress. (The TPA sets no deadline for the President to do this.)However, in a July 2, 2007 statement, House Democratic leaders cited problems withthe agreement and indicated they could not support the KORUS FTA “as currentlynegotiated.”The United States and South Korea conducted the FTA negotiations with a highdegree of political risk for both countries, and that risk will likely carry over as theirrespective legislatures debate the merits of the FTA.The KORUS FTA is the product of much compromise. As negotiators fromboth countries stated, the two sides were able to accomplish some of their objectives,but neither side got everything it wanted. Reactions to the KORUS FTA in both theUnited States and South Korea have been mixed. U.S. business community viewslargely reflect perceptions of to what degree the objectives of various groups wererealized in the final agreement. In general, the U.S. business community at large —particularly many financial services firms — has expressed strong support for theFTA. However, some U.S. automobile manufacturers and major U.S. unions havecriticized the agreement. Major agricultural groups have delayed a full response tothe negotiations until South Korea agrees to lift its restrictions on imports of U.S.beef, underscoring the political importance of resolving this issue.This report is designed to assist Members of the 110
Congress as they considerthe merits of the KORUS FTA. It examines the KORUS FTA in the context of theoverall U.S.-South Korean economic relationship, U.S. objectives, and South Koreanobjectives. The report will be updated as events warrant.