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U.S. trade agreement with South Korea

U.S. trade agreement with South Korea

The Office of the U.S. Trade Representative (USTR) announced the effects of negotiations with respect to the United States-South Korea free trade agreement.

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According to the USTR release, the following measures result from the free trade discussions:

  • South Korea will extend the phase out of the 25% U.S. tariff on trucks until 2041, or a total of 30 years following implementation of the free trade agreement in 2012 (currently scheduled to phase out by 2021).
  • Exports of U.S. motor vehicles to South Korea will reflect: (1) greater access for U.S. exports; (2) U.S. gasoline engine vehicle exports able to show compliance with South Korea’s emission standards using the same tests they conduct to show compliance with U.S. regulations, without additional or duplicative testing for the Korean market; (3) South Korea will recognize U.S. standards for auto parts necessary to service U.S. vehicles, and reduce labeling burdens for parts; and (4) South Korea will expand the amount of “eco-credits” available to help meet fuel economy and greenhouse gas requirements while fuel economy targets in future regulations will be set taking U.S. regulations into account and to continue to include more lenient targets for small volume manufacturers.
  • South Korea will address concerns with customs procedures for verification of the origin of exports.
  • Within 2018, South Korea will amend its pricing policy for global innovative drugs.

The USTR release also addresses U.S. national security concerns with respect to steel imports. In general, South Korean imports of steel products into the United States will be subject to a product-specific quota equivalent to 70% of the average annual import volume of such products during the period of 2015-17—thus, a reduction in Korean steel shipments to the United States.

 

For more information, contact a professional with KPMG’s Trade & Customs practice:

Douglas Zuvich | +1 (312) 665-1022 | dzuvich@kpmg.com

Andrew Siciliano | +1 (631) 425-6057 | asiciliano@kpmg.com

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