Monday, October 27, 2014 Trade Report
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Concluding a recent trade mission to Korea, U.S. Secretary of Commerce Penny Pritzker said the U.S.-Korea Free Trade Agreement has “delivered tangible results” but added that the two sides need to do a better job overcoming future implementation challenges.
In an Oct. 23 speech to the American Chamber of Commerce in South Korea, Pritzker alluded to recent reports of the negative effects of the KORUS agreement (including an increase in the U.S. trade deficit with South Korea) by saying officials in both countries “need to improve the narrative” by “communicating the success stories so that other companies will be inspired to take advantage of KORUS’ benefits.” She pointed out that while “we have only scratched the surface of the potential benefits of KORUS” it has already had a number of positive results: goods and services exports by both countries have increased, Korean exports in the industrial and agricultural sectors are rising, Korean services exports to the U.S. have gained more than 10 percent and U.S. services exports to Korea have risen 25 percent, U.S. investment in Korea has grown by more than 24 percent, and Korea is now the seventh fastest-growing investor into the U.S.
Pritzker also acknowledged “key challenges” in the implementation of the agreement. One such challenge is the heightened scrutiny of claims for preferential treatment under KORUS, which has come in the form of excessive demands for documentation and on-site visits to suppliers several steps down the supply chain, although both of these measures are well within the bounds of the agreement. According to a Politico article, other challenges include “Seoul giving its regulators discretion to not abide by FTA data transfer requirements for financial services and South Korea’s disregard for the FTA requirement that express shipments of less than $200 value not be subject to entry document requirements.” Pritzker praised the Korean government for its work to address these issues but warned that further implementation challenges “are sure to arise” and that they will need to be dealt with “more quickly and more efficiently.”