The United States and South Korea have maintained a strong economic relationship for decades. In 2007, the two countries signed the US-Korea Free Trade Agreement (KORUS FTA), which aimed to increase trade between the two nations by reducing tariffs and eliminating other barriers to trade.
The KORUS FTA went into effect in 2012 and has had a significant impact on trade between the US and South Korea. According to the Office of the United States Trade Representative, US exports to South Korea increased by 14% in 2019, compared to the year before the agreement was signed. This growth has been particularly strong in industries such as aerospace, automotive, and agriculture.
One of the key benefits of the KORUS FTA is the reduction of tariffs on US exports to South Korea. Prior to the agreement, many US companies faced high tariffs when trying to sell their products in South Korea. For example, US beef exports were subject to a 40% tariff, which made it difficult for US farmers to compete with domestic producers in South Korea. Under the KORUS FTA, the tariff on US beef exports has been reduced to 26.6% and will continue to be reduced over the next several years. This has made it easier for US farmers to sell their products in the South Korean market.
The KORUS FTA has also helped to remove other barriers to trade between the US and South Korea. For example, the agreement includes provisions that ensure that US companies have fair access to the South Korean market for their services. This has been particularly important for companies in the financial and telecommunications industries.
However, the KORUS FTA has not been without controversy. In 2018, the Trump administration renegotiated the agreement, citing concerns about the US trade deficit with South Korea. The renegotiated agreement included changes to the rules on automotive trade, which were designed to make it easier for US companies to sell their cars in South Korea. However, some experts have criticized these changes, arguing that they could have negative consequences for US automotive workers.
Overall, the US-Korea Free Trade Agreement has been a positive development for both the US and South Korea. By reducing tariffs and other barriers to trade, the agreement has helped to increase economic growth and create jobs in both countries. Despite the controversy surrounding the renegotiation of the agreement, its ongoing success demonstrates the importance of strong trade relationships between nations.