Marking the Start of FTA Negotiations Between the Republic of Korea and the United States

MARKING THE START OF FTA NEGOTIATIONS BETWEEN THE REPUBLIC OF KOREA AND THE UNITED STATES

Mr. FOSSELLA. Mr. Speaker, the United States and the Republic of Korea (ROK) recently embarked on a new and exciting chapter in the history of Korean-American relations. June 5, 2006 marked the start of formal negotiations on a free trade agreement (FTA) between our two countries. I would like to recognize this important event, which I believe will lead to significant economic opportunities for Koreans and Americans alike.

From a commercial perspective, the Republic of Korea-United States FTA (the ``KORUS FTA'') is the most important bilateral trade agreement the United States has negotiated in over a decade. After a remarkable recovery from the devastating effects of the Korean conflict, ROK has risen to become the 10th largest economy in the world with a GDP approaching $1 trillion and per capita income of over $20,000. ROK consumers have the means to purchase our goods, and ROK investors have the wherewithal to invest in our country.

The Republic of Korea is now our seventh largest trading partner, and represents our sixth largest market for agricultural exports. Two-way trade exceeds $70 billion annually. And Korea is a growing market for U.S. service providers. The United States actually boasts a services trade surplus with ROK of $4.3 billion.

But there is much more opportunity for growth and an FTA will serve as the catalyst for trade promotion. ROK's average tariff on goods is just over 11 percent--three times higher than the U.S. equivalent. The average tariff applied by ROK on agricultural products is even higher--52 percent.

This comprehensive trade accord will eliminate tariffs and address other barriers to trade in the United States and the Republic of Korea, thereby stimulating U.S. export growth and investment. As the U.S. International Trade Commission noted, U.S. goods exports to ROK could increase by 50 percent and U.S. agricultural exports could increase by 200 percent with a fully implemented KORUS FTA.

New Yorkers, in particular, could realize substantial benefits from the KORUS FTA as tariffs and other barriers are eliminated. In 2005, New York exported $1.4 billion in goods to the Republic of Korea, including machinery, computers and electronic products, transportation equipment, and chemicals. And the FTA would liberalize ROK services markets, creating exciting opportunities for New York's financial services providers.

Agriculture is also very important to New York's economy. Our state is one of the top dairy producers in the country, along with apples, hay, and cattle. If we are able to lower ROK trade barriers on these goods, New York producers will increase sales as they expand their market share in the Republic of Korea. ROK, for example, applies a 45 percent duty on apple imports.

Despite our close bilateral alliance, U.S. market share in the Republic of Korea has actually decreased in recent years due to the influence of other emerging economies in the marketplace. Enhanced and preferential access to the ROK market for U.S. exporters and investors will improve our economic position in Asia and allow us to compete more effectively in the very challenging global marketplace.

Further, the Republic of Korea has FTAs with several other countries, and is currently negotiating with Canada. The KORUS FTA will level the playing field for U.S. exporters who would otherwise experience a competitive disadvantage in the ROK market.

In addition to the economic benefits an FTA could provide, it is also important to note ROK role as a long-standing U.S. ally.

The United States and the Republic of Korea have a mutual defense treaty that dates back to 1953, and ROK has supported U.S. military efforts abroad, including in Iraq and Afghanistan.

And in the aftermath of Hurricane Katrina, ROK pledged over $30 million in aid for relief and recovery efforts--the fourth largest amount donated by any foreign country.

I strongly believe that this new partnership between the United States and ROK is positive development for both of our countries. As the trade negotiations proceed, I look forward to working closely with the U.S. and ROK negotiators, my New York constituents, and fellow colleagues so that we can ensure this agreement is a win-win for both countries.

Mr. Speaker, thank you for allowing me to extend my remarks noting this important occasion. I hope that my colleagues will join me in recognizing and supporting the KORUS FTA negotiations.

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