Trade Agreement Between US and Korea
Article 1
The announcement of the resolution of outstanding issues between the US and South Korea was made by President Barrack Obama in December 2010. This made it possible for the ratification of a trade agreement between the two countries. The agreement will be expected to provide about 70000 jobs due to increased exports. The administration of Barrack Obama has been pursuing an active policy of ensuring that American citizens benefit from the agreement.
This will be achieved through the removal of the barriers that have been preventing US goods from entering Korea. Besides, the agreement will offer more jobs in different sectors, such as telecommunication, health care, and education, for American workers.
Within five years, the agreement is expected to abolish tariffs imposed on consumer and industrial goods. The first sector that will enjoy reduced tariffs will be the auto sector. The auto companies are expected to benefit from the agreement through the provision of market opportunities in Korea. It will enable companies from the US. to market their products in Korea since the Korean safety standards for automotive that create trade barriers will be eliminated. It will also address the environmental standards aimed at ensuring that automobiles do not cause harm to the environment. This will involve regulation of the tariffs associated with trade between the two countries.
Manufacturing will be the second sector that will benefit significantly from the agreement. It will be an advantage for US manufacturers who will export their products to Korea in two ways. The first way is to eliminate tariffs on US exports to Korea, while the second one is to address non-tariff barriers to US exported goods. The agreement will ensure that US exports will gain entry into Korea without payment of duty. Apart from the tariffs, it will establish new rules on how Korea will create regulations that will deal with US exports and intellectual property rights that will be crucial for the knowledge-based manufactured goods industry.
About services, Korea will be expected to embrace the level of openness that is provided by service sectors of the US. The provisions of the agreement on cross-border services, electronic commerce, and telecommunication offer specific advantages to the information and communications technology sectors. Also, the agreement will prevent Korea from setting technology standards that will not favor the US.
In the agricultural sector, the agreement will allow farmers and ranchers from the US to trade freely with their Korean counterparts. This will be done through the elimination of tariffs that will be charged on US exports entering Korea and tackling other barriers that will prevent goods from entering the Korean market.
The agreement will create more opportunities for investment for US companies by enabling them to gain market access and protection for their investment. It has provisions that allow US companies to trade with their Korean counterparts without many restrictions. It will also give US financial firms the ability to address financial crises.
Regarding labor rights, workers will be shielded from any negative experiences during their business activities. The agreement contains groundbreaking elements that were outlined for the first time in 2007. The Korean government will, therefore, be mandated to ensure that labor commitments will be met. The environmental commitment that will incorporate high environmental standards into America’s trade agreements will also be part of the agreement.
Meeting environmental commitments will, therefore, be a responsibility that the Korean government will be expected to achieve. Finally, the agreement will highlight the issue of government procurement. It will enable US firms to access Korean markets with few limitations. This will create new opportunities for exports and allow US and Korean firms to have equal bidding capacity.
Discussion questions
- Why should Korea sign the FTA agreement from which both parties (US and Korea) do not seemingly benefit? Isn’t it more likely to heavily favor the US?
- With the current poor growth of the economy, will the US benefit from the FTA agreement and improve its economy?
- Is it an appropriate decision for the US to apply the FTA agreement in Korea since Korean companies are likely not to benefit from it?
Article 2
The ability of the US to create or support jobs at home depends on the country’s ability to export goods and services to other countries. American citizens whose jobs rely on the success of exports earn by thirteen to eighteen percent higher than the national average. This is a major reason why President Obama wants the US-South Korea agreement to be approved. The agreement will secure about 70000 jobs that will be achieved through the reduction of non-tariff barriers and the enforcement of intellectual property rights in Korea. It will also create opportunities for more exports. Several facts are associated with the agreement.
The first fact is that the number of American auto workers who access the market will increase. The two countries have agreed to make significant improvements to enable US auto companies to access the market. This is to be done by ensuring that the environmental standards will not act as barriers and also addressing the ones that will be occasioned by South Korea’s system of automotive safety.
The second one is the increase in economic benefits for Americans. The benefits will be expected to take the form of tariff cuts and adjustments. Besides, Americans will benefit due to South Korea’s economy’s significant growth which is expected to continue increasing. The US will be given a chance to access a high growth market, and this will help its economy grow and recover.
The third one is to gain from a level playing field. The tariff cuts in the agreement will enable America’s manufacturers and farmers to improve their competitive position. The reduction in the tariffs will be beneficial for American farmers since they will sell more and create more job opportunities at home.
The fourth fact is that the number of American products sold to South Korea will increase. American manufacturers of environmental goods, machinery, medical equipment, and information technology rely on the South Korean market for the export of their goods. Manufactured goods that account for a significant percentage of American exports to Korea support many job opportunities. The reduction in tariffs will, therefore, be expected to increase exports and create related jobs.
The fifth one includes that more American services will be sold to Korea. The US is known for its international export in the following services, financial, express delivery, consulting, legal, and accounting ones. The agreement will give the country access to the Korean market where it can provide these services, thus it will be enabled to build its existing strong export history.
Finally, the agreement between South Korea and the US will create a competitive marketplace. At some point, America was the biggest Korean trading partner. But since 2003, the country was overtaken by China, Japan, and the European Union. This caused the share of Korea’s import market for goods to fall from 21% to 9% in a decade. The agreement will enable American workers and companies to seize their place in the Korean marketplace and ensure that most of the goods sold will be produced in the US.
Discussion questions
- Does the FTA agreement between the US and South Korea portend any possible negative implications for the US citizens?
- How is the US prepared to deal with the challenge of domestic instability that often accompanies FTA agreements?
- If the Korean companies intend to benefit more from the agreement than the US, what measures should the US take to sustain the agreement?