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Outcomes of U.S.-South Korea FTA Renegotiation Published; Further Steps Needed to Implement

The United States and South Korea have published the agreed outcomes of their negotiations earlier this year to amend and modify the U.S.-Korea Free Trade Agreement (KORUS). The Office of the U.S. Trade Representative states that these outcomes include amendments and modifications to KORUS as well as additional agreements and understandings to improve its implementation.

According to USTR, South Korea will now open for public comment the provisional Korean translations of the outcomes. Once this is complete and the translations are certified by both governments, the documents may be finalised for signature, which will be followed by further procedures in both countries as needed to bring the outcomes into force. In the United States, any necessary modifications to the tariff schedule will undergo consultation and layover procedures that include a 60-day consultation period with Congress.

USTR indicates that changes to KORUS include the following.

  • The phase-out of the 25 percent U.S. tariff on South Korean trucks will be extended from 2021 to 2041.
  • The number of U.S. automobile exports that can meet U.S. safety standards (in lieu of South Korean standards) and enter the South Korean market without further modification will be doubled to 50,000 cars per manufacturer per year.
  • U.S. gasoline engine vehicle exports may show compliance with South Korea’s emission standards using the same tests conducted to show compliance with U.S. regulations.
  • South Korea will recognise U.S. standards for auto parts necessary to service U.S. vehicles and reduce labelling burdens for parts.
  • South Korea has agreed on principles for conducting verification of origin of exports under KORUS.
  • Within 2018 South Korea will amend its Premium Pricing Policy for Global Innovative Drugs to make it consistent with commitments under KORUS to ensure non-discriminatory and fair treatment for U.S. pharmaceutical exports.
  • A memorandum of understanding is being finalised on robust provisions to prohibit competitive currency devaluation and exchange rate manipulation.
  • South Korean exports of steel products to the United States will be subject to a product-specific quota equivalent to 70 percent of the average annual import volume of such products during the period 2015 to 2017.
Content provided by Picture: HKTDC Research
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