SUBMITTED BY:

GARCIA, SHERINA D.
HAGOS, DARLENE
LOYOLA, JHERVIN
MARTIN, ALEXA JVY ANDREA A.
MITRA, ANGELICA R.
SARMIENTO, LOTHRELL JOSEPH D.

SUBMITTED TO:
MR. CEZAR RAMIREZ
 KORUS FTA

The United States–Korea Free Trade Agreement (officially: Free Trade Agreement
between the United States of America and the Republic of Korea), also known as KORUS
FTA, is a trade agreement between the United States and South Korea. Negotiations
were announced on February 2, 2006, and concluded on April 1, 2007. The treaty was
first signed on June 30, 2007, with a renegotiated version signed in early December 2010.

HISTORY

While the treaty was signed on June 30, 2007, ratification was slowed when
President George W. Bush's fast-track trade authority expired and a Democratic Party-
controlled Congress expressed objections to the treaty related to concerns over bilateral
trade in automobiles and U.S. beef exports. Nearly three years later, on June 26, 2010,
President Barack Obama and President Lee Myung-bak expressed renewed commitment
to the treaty, stating that they would direct their governments to resolve remaining
obstacles to the agreement by November 2010.

After discussions at the November 2010 G-20 Seoul summit and further
negotiations in December 2010 in Maryland, Presidents Obama and Lee announced on
December 4, 2010, that a deal had been reached; they subsequently signed an updated
version of the agreement. On March 15, 2012, the agreement entered into effect.

U.S.-KOREA TRADE FACTS

U.S. goods and services trade with Korea totaled an estimated $165.4 billion in
2018. Exports were $78.8 billion; imports were $86.6 billion. The U.S. goods and services
trade deficit with Korea was $7.8 billion in 2018.

Korea is currently our 6th largest goods trading partner with $130.8 billion in total
(two way) goods trade during 2018. Goods exports totaled $56.5 billion; goods imports
totaled $74.3 billion. The U.S. goods trade deficit with Korea was $17.8 billion in 2018.
 Trade in services with Korea (exports and imports) totaled an estimated $34.6
billion in 2018. Services exports were $22.3 billion; services imports were $12.3 billion.
The U.S. services trade surplus with Korea was $10.0 billion in 2018.

EXPORTS

Korea was the United States' 7th largest goods export market in 2017.

U.S. goods exports to Korea in 2018 were $56.5 billion, up 16.9% ($8.2 billion)
from 2017 and up 63.0% from 2008. U.S. exports to Korea are up 30.0% from 2011 (pre-
FTA). U.S. exports to Korea account for 3.4% of overall U.S. exports in 2018.

The top export categories (2-digit HS) in 2018 were: mineral fuels ($10.0 billion),
machinery ($7.9 billion), electrical machinery ($5.7 billion), optical and medical
instruments ($3.5 billion), and aircraft ($3.3 billion).

U.S. total exports of agricultural products to Korea totaled $8.3 billion in 2018.
Leading domestic export categories include: beef & beef products ($1.7 billion), corn ($1.4
billion), pork & pork products ($670 million), fresh fruit ($491 million), and wheat ($363
million).

U.S. exports of services to Korea were an estimated $22.3 billion in 2018, 6.6%
($1.6 billion) less than 2017, but 63.2% greater than 2008 levels. It was up roughly 33.8%
from 2011 (pre-FTA). Leading services exports from the U.S. to Korea were in the travel,
intellectual property (industrial processes, and computer software), and transport sectors.

IMPORTS

Korea was the United States' 6th largest supplier of goods imports in 2017.

U.S. goods imports from Korea totaled $74.3 billion in 2018, up 4.0% ($2.8 billion)
from 2017, and up 54.5% from 2008. U.S. imports from Korea are up 31.1% from 2011
(pre-FTA). U.S. imports from Korea account for 2.9% of overall U.S. imports in 2018.
 The top import categories (2-digit HS) in 2018 were: vehicles ($18 billion),
machinery ($15 billion), electrical machinery ($14 billion), mineral fuels ($3.2 billion), and
pharmaceuticals ($2.7 billion).

U.S. total imports of agricultural products from Korea totaled $627 million in 2018.
Leading categories include: processed fruit & vegetables ($119 million), snack foods ($52
million), other fresh fruit ($36 million), fresh vegetables ($22 million), and other dairy
products ($16 million).

U.S. imports of services from Korea were an estimated $12.3 billion in 2018, 13.5%
($1.5 billion) more than 2017, and 52.6% greater than 2008 levels. It was up roughly
26.7% from 2011 (pre-FTA). Leading services imports from Korea to the U.S. were in the
transport, travel, and intellectual property (industrial processes) sectors.

TRADE BALANCE

The U.S. goods trade deficit with Korea was $17.8 billion in 2018, a 23.0%
decrease ($5.3 billion) over 2017.

The United States has a services trade surplus of an estimated $10.0 billion with
Korea in 2018, down 23.4% from 2017.

INVESTMENT

U.S. foreign direct investment (FDI) in Korea (stock) was $41.5 billion in 2018, a
0.2% decrease from 2017. U.S. direct investment in Korea is led by manufacturing,
finance and insurance, and wholesale trade.

Korea's FDI in the United States (stock) was $58.3 billion in 2018, up 12.6% from
2017. Korea's direct investment in the U.S. is led by wholesale trade, manufacturing, and
depository institutions.
 Sales of services in Korea by majority U.S.-owned affiliates were $13.6 billion in
2016 (latest data available), while sales of services in the United States by majority Korea-
owned firms were $25.7 billion.

SUMMARY ASSESSMENT

The Korea-United States Free Trade Agreement (KORUS FTA) opens up

substantial new opportunities for bilateral trade and investment in goods and services and
promotes important foreign policy interests of both countries. The FTA quickly removes
most tariff barriers to auto trade and substantially reduces tax and regulatory burdens that
impede sales of US cars in Korea; improves access to the Korean market for a wide range
of US farm products; and opens up the Korean services market in key areas such as
financial services, insurance, express delivery, and legal and accounting services.
Nonetheless the ratification of the KORUS FTA has been controversial. In the United
States attention has focused on both the auto sector, which accounts for almost one-
quarter of bilateral trade and a large share of the US trade deficit with Korea, and Korean
restrictions on US beef imports due to bovine spongiform encephalopathy (BSE)
concerns. Several automakers and auto unions have opposed the deal, and the
Democratic leadership in the US House of Representatives has demanded that the auto
provisions be recast. In the US Senate, the resolution of the beef problem-which is now
being addressed by Korean regulators-is a prerequisite to passage of implementing
legislation. No clear timetable exists for the congressional vote and action may be
deferred until 2008. The Bush administration will have to respond constructively to
Democratic concerns about the FTA before the deal can be ratified and should consider
new federal programs to help promote the competitiveness of US automakers. Doing so
should attract a substantial minority of Democrats in the House, along with the majority
of Republicans, to support the FTA. The stakes-in terms of both US economic and
security interests in East Asia-are too great, and the costs too high, to reject the pact or
defer a decision.