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Agriculture Law: RL33435

Agriculture Law: RL33435

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Published by: aglaw on Jan 26, 2008
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Order Code RL33435
The Proposed South Korea-U.S. Free TradeAgreement (KORUS FTA)
Updated July 18, 2007
William H. CooperSpecialist in International Trade and FinanceForeign Affairs, Defense, and Trade DivisionMark E. ManyinSpecialist in Asian AffairsForeign Affairs, Defense, and Trade Division
 
The Proposed South Korea-U.S. Free Trade Agreement(KORUS FTA)
Summary
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
th
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.
 
Contents
The Results of the Negotiations.......................................2Agriculture...................................................2Automobiles .................................................4The New Trade Policy for America..............................5Other Provisions...............................................6Preliminary Reactions to the Negotiations...........................7An Overview of the U.S.-South Korean Economic Relationship.............9U.S. Interests and FTA Negotiating Objectives .........................11Why an FTA?................................................11U.S. Issues and Negotiating Objectives ...........................13Agriculture..............................................13Autos and Autoparts......................................15Other Manufactured Goods.................................16Intellectual Property Rights (IPR) Protection...................17Services................................................17Foreign Investment.......................................17Competition Policy.......................................18Other U.S. Objectives.....................................18South Korean Interests in an FTA with the United States..................19Why an FTA?................................................19Criticism of the FTA within South Korea..........................22South Koreas Proposed Trade Adjustment Assistance................23South Korean Issues and Negotiating Objectives ....................23Agriculture..............................................24The Kaesong Industrial Complex............................24U.S. Antidumping Practices.................................27Visa Issues..............................................28The Potential Economic Effects of a U.S.-South Korean FTA..............30Trade Creation vs. Trade Diversion...........................30Estimates of the Economic Effects of a KORUS FTA............31Next Steps ......................................................32Other Relevant CRS Products.......................................33Appendix A. Timeline for Negotiation, Congressional Consultation, andLegislative Implementation of Trade Agreements Under TPA..........34Appendix B. A Short Guide to the Expedited Legislative Procedures forPassage of Trade Implementing Bills Under TPA....................35Appendix C. Top 10 U.S. Exports to and Imports from South Korea, 2006...37

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