International Trade and Technology Transfer (IT3) Update

    View Author February 2006
    The Office of the United States Trade Representative (USTR) has announced plans to initiate negotiations for a free trade agreement (FTA) with the Republic of Korea. US Trade Representative Ambassador Rob Portman said the negotiations will be conducted "with the goal of removing tariffs and non-tariff barriers and expanding trade between the countries."

    Korea is the 10th largest economy in the world, with an annual gross domestic product rapidly approaching US$1 trillion. Korea is the seventh largest export market for the United States, and the United States – after China – is the second largest market for Korean exports. Two-way trade in goods between the United States and Korea in 2005 was valued at about US$72 billion.

    The talks, if successful, would represent the most significant FTA for the United States since it joined the North American Free Trade Agreement (NAFTA) in 1993. Ambassador Portman predicts that "[r]emoving trade and investment barriers between our two nations through an FTA will increase market access for our farmers, ranchers, workers and businesses to the dynamic and growing Korean economy, boosting trade in goods and services."

    The agreement would seek to address some significant Korean trade barriers, including nontariff barriers in the agricultural sector and intellectual property rights enforcement, as well as standards and technical barriers to trade at the customs level. Restrictions currently limiting the access of the US film industry to the Korean market may also be addressed. It may also address the issue of admission of non-Korean lawyers to practice law in Korea.

    An FTA between the countries would be expected to boost trade in both directions, with an overall decrease in the US trade deficit with Korea. US investment in Korea would also be expected to surge. As an example, US investment in Singapore grew from US$530 million in 2002 to US$6.6 billion in 2004, following the signing of the US-Singapore FTA in 2003.

    The negotiations are set to begin on May 3, 2006, following the expiration of a required 90-day consultation period. President Bush provided Congress with the required 90 days' written notice of the negotiations on February 2.

    USTR has published a notice in the Federal Register (71 FR 6820) seeking public comments on the negotiations and announcing a public hearing to be held beginning March 14, 2006. Persons wishing to testify orally at the hearing must provide written notification and testimony by March 3. Written comments are due by noon on March 24. It is important to ensure that comments are placed on the record as this hearing will form the basis for the US-Korea negotiations, which will begin in May.

    For more information, contact Shanker Singham, +1.305.577.7039 or +1.202.626.6600; Ritchie Thomas, +1.202.626.6686; or the Squire Sanders lawyer with whom you normally work.