Professional Documents
Culture Documents
Introduction
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This is a particularly opportune time for a conversation about US-
Korean relations, because it was 60 years ago that the Korean War
started and brought our two countries together.
For decades, the United States was Korea’s biggest trading partner.
But it lost that distinction to China in 2003. Since then, the U.S.
has also been surpassed by Japan and the European Union.
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KORUS FTA
As President Obama said, “it is the right thing to do for the United
States. It is also the right thing to do for Korea.”
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every product manufactured in the United States, as well as to
agriculture and to service industries.
And third, it’s about security. Passage of the KORUS FTA will
help the U.S. maintain its leadership role in East Asia. It will help
ensure the US-Korea alliance remains as a force for stability at a
time of seismic change in Northeast Asia.
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It will eliminate about 80 percent of Korea’s tariffs on U.S.
imports right away. It will eliminate about 95 percent of them
within three years and virtually all of them within 15 years.
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Many of them knew that Korea was also working on free trade
agreements with other countries, including the European Union,
Canada, and Australia, and they worried that the United States
would be left behind.
Elliot has been active in Korea for decades, but faces competition
from European companies. The KORUS FTA’s elimination of the
5 to 15 percent tariffs that Elliot pays on its exports to Korea will
help it hold on to its share of a growing market.
Korea and Chile already have an FTA. It took effect in 2004 and
Chilean wine exports to Korea overtook U.S. exports within a year.
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The Korea-EU FTA will be signed on October 6 and take effect in
July 2011. If there is no KORUS-FTA by that time, the United
States will be the only major wine exporter that pays a tariff in
Korea. It will face difficulties the Korean market, where the
popularity of red wine has exploded in recent years.
And in Los Angeles, we met with the leaders of the Motion Picture
Association of America. They were excited about passage of the
KORUS FTA for several reasons. One is that Korean theater
owners were required to show Korean movies 143 days per year.
Our government reduced the quota to 73 days per year and the
KORUS FTA guarantees that it will not increase. It also cracks
down on illegal recording and piracy and strengthens Korea’s
copyright and intellectual property protections.
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There are stories like these in every city and state in the U.S. And
in some, there is another kind of story – the story of Korean
investment in the United States. It may surprise you to learn that
Korean companies invest more here than U.S. companies invest in
Korea – $6.3 billion compared to $1.3 billion in 2008.
Samsung, LG, Hyundai, Kia and many other Korean firms have
operations here and they employ tens of thousands of Americans.
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Chevy Volt. About 300 people will work there. President Obama
attended the launch ceremony in July.
Let’s also note that Korean tourists spend about $2.6 billion every
year in the U.S. and Korean students at U.S. colleges and
universities spend about $3 billion.
The KORUS FTA will make it easier for Korean firms to open
plants and stores in the United States, so we can expect more of
this kind of investment after its passage.
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of clear understanding, so let me explain exactly what is going on
with these two commodities.
Autos
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It also makes it much easier for U.S. automakers to comply with
Korea’s environmental and safety standards, allows the U.S. to
reinstate its tariff on Korean imports if Korea is found to have
violated the agreement, and sets up an automotive working group
that will meet regularly to resolve any compliance issues or
complaints from the U.S. auto industry that may arise.
There can be no doubt that these provisions will increase U.S. auto
exports to Korea.
Still, there are people who say that Korea’s auto import policies are
a major contributor to U.S. trade deficits. But in reality, the trade
of goods and services between our two countries is almost
balanced. In the first half of 2010, the U.S. trade deficit with Korea
was a relatively low $400 million, a fraction of our total two-way
trade volume of $67.8 billion.
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Since 2000, auto imports to Korea have increased on average 40
percent each year, reaching 7.2 percent of market share in 2008.
Since imported cars are more expensive than domestic ones, their
market share by value was even higher, 19 percent.
Part of the reason for this is that U.S. automakers are heavily
invested in production of large-engine cars, while Korean
consumers have a clear preference for smaller ones.
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In fact, the outlook for U.S. auto sales in Korea is already
improving, Ford’s April 2010 sales in Korea were more than
double what they were in April 2009, thanks to the popularity of
the 2010 Taurus, the fifth-best-selling import car in Korea so far
this year and the best-selling in its class.
Beef
In 2003, Korea was the third largest market for U.S. beef exports.
Then, in December of that year, mad cow disease was discovered
here in the United States. Korea was forced to close its market to
U.S. beef imports until 2006, when U.S. beef was certified as safe
to eat. Korea re-opened the market, but only to beef from cattle
less than 30 months old.
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U.S. beef exports immediately started to bounce back and have
increased every year since. Between January and June 2010, U.S
beef exports to Korea increased by about 130 percent over the
same period in 2009. At the end of last year, they reached $645
million. But that left them well short of their pre-mad cow level,
which was $815 million in 2003. Without the KORUS-FTA, they
may never get there.
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On both the auto and beef issues, we are ready and willing to sit
down with our American counterparts, listen to their concerns and
try to find mutually-acceptable solutions. And we will do so
sincerely and in good faith.
Conclusion
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