On May 16th, Ron Kirk, the US Trade Representative, and Bark Tae-ho, the Korean Minister for Trade, led the first KORUS FTA Joint Committee meeting, which oversees the ongoing implementation of the FTA. The two delegates discussed the successes of the first two months since the implementation of the FTA on March 15th of this year. Rules of dispute settlement within the FTA framework were also a topic of their meeting, and remain an important issue between the two countries.
Korean exports to the US were up more than 11% in the period from March 15th to May 14th, compared with the same period a year ago, according to a report by the Korea Customs Service. Imports from the US also increased year-on-year, but by a more modest 2%. Many of the items whose tariff levels changed with the FTA saw increased shipments, including cars and auto parts from Korea, at 31% and 15% year-on-year growth respectively. US construction machinery imports from Korea increased 119% from last year. As a world leader in semiconductor manufacturing, it is surprising to note that Korea’s exports of semiconductors to the US decreased 40%, while imports of semiconductor equipment from the US rose 49%. Despite tariffs beginning to decrease on US beef and pork, new health and sanitary concerns regarding American meat caused demand to fall. Exports of meat to Korea were down 13% compared to the same period last year.
About four-fifths of US merchandise exports to Korea became duty free immediately upon implementation of the agreement on March 15 of this year, according to the US Trade Representative KORUS factsheet. In five years, nearly 95 percent of bilateral trade in will be duty free and most of the remaining tariffs will be eliminated by 2022.