US-S.Korea Free Trade Pact Signals Expanding Exports

U.S. officials are predicting an increase of $10 billion to $11 billion in exports to South Korea following the endorsement on Friday of a new free trade agreement. The deal now goes to the Senate for ratification.

The “KORUS” free trade agreement has been in the works since the Bush administration, and some U.S. industry leaders feared delays would shut the U.S. out of the republic’s $1 trillion economy. South Korea now ranks No. 7 among U.S. trading partners, up a step from its position last year.

By The Numbers: Top 10 U.S. Trading Partners in 2009.

Under the deal, South Korea will reduce tariffs on imported manufactured goods and agricultural products. According to John Engler, president of the National Association of Manufacturers, the agreement will eliminate tariffs on 95 percent of consumer and industrial products in three years.

“This is one of the largest bilateral trade deals the U.S. has ever undertaken,” Engler said. “Korea represents a manufactured goods import market of $250 billion. Without this agreement, U.S. exporters only have 11 percent of the market – and face a higher cost of doing business.”

“We view today’s announcement as a positive signal that the administration is committed to advancing the U.S. trade agenda,” said Chuck Dittrich, National Foreign Trade Council vice president. “It is with the same sense of urgency that we ask the administration to take action on the trade pacts with Colombia and Panama.”

The agreement was expected to be concluded so it could be announced at the G20 Summit in Seoul three weeks ago, but South Korea balked on the issues of beef and automobiles. The agreement calls for a reduction in auto tariffs over five years.

Beef imports were not part of the agreement. Sen. Max Baucus, D-Mont., was “deeply disappointed.” He said, “I am deeply committed to righting this wrong and will work with the administration in the period ahead to ensure that America’s ranchers and farmers are not left behind.”

-- Contact R.G. Edmonson at bedmonson@joc.com.