On Friday, December 3, United States Trade Representative (USTR) Ron Kirk and South Korean Minister
for Trade Kim Jong-hoon concluded negotiations on the U.S.-Korea Free Trade Agreement (KORUS), with
Kirk stating: “We’ve made substantial progress in our discussions. It’s time now for the leaders to
review this progress before we move forward.”
According to the Obama administration, the agreement is expected to boost U.S. exports by
$10 billion to $11 billion and support 70,000 U.S. jobs. While U.S. auto makers have been singled
out among the beneficiaries of the pact, the manufacturing sector as a whole stands to benefit from
the elimination of tariffs on more than 95 percent of industrial and consumer products within five
years of ratification of the agreement. Customs enforcement and rules of origin — points that have
been of major concern to the U.S. textile industry — are also addressed, according to USTR
spokesperson Carol J. Guthrie.
“Under the agreement, many textile tariffs are eliminated immediately in the US and in
Korea. There is a 10-year timetable for phaseout of duties for U.S. imports of some sensitive
textile products,” Guthrie stated, noting that the schedule is in line with timetables for other
manufactured goods. “In addition, the agreement contains a special textile safeguard allowing the
United States to re-impose tariffs on certain goods should Korean textile import surges damage/harm
domestic producers. The agreement also contains strict customs enforcement provisions. U.S. and
Korean customs authorities are authorized to undertake a variety of enforcement actions where
textile exporters are breaking the rules — up to and including denying entry for suspect goods.
Finally, the agreement contains stringent rules of origin,” she concluded without providing details
of those rules.
However, the protections described by the Office of the USTR are relatively general in
nature, and organizations representing the U.S. textile industry are concerned that certain
specific provisions they had requested for inclusion may not be included in the agreement that will
be presented to Congress. With regards to duty phase-outs for sensitive textile products, these
groups charge that 60 percent of these products will become duty-free immediately and only 10
percent of these products are scheduled for a 10-year tariff phase-out period. There also are
concerns that the customs enforcement language will not adequately protect the U.S. textile
industry from fraudulent activity, particularly activities such as transshipments of Chinese goods
through South Korea.
The final text of the agreement that is posted on USTR’s website dates from 2007, when the
original agreement was written, and there was no clarification from USTR about the inclusion of the
specific provisions requested by these groups as of the publication deadline for
Textile World
‘s e-newsletter for December 7.
In a statement provided by the American Manufacturing Trade Action Coalition (AMTAC), the
organization said that based on the information that is currently available, including reports that
only the automotive provisions of KORUS have been modified, it would have to oppose agreement.
“AMTAC will obviously study the final text, but, if the flaws that industry identified in
the agreement were not fixed, then this deal could offshore tens of thousands of additional U.S.
manufacturing jobs,” said Auggie Tantillo, AMTAC’s executive director.
National Council of Textile Organizations (NCTO) President Cass Johnson also expressed
concerns about the strength of the provisions related to textiles. He noted that there is a general
lack of support and manpower to adequately enforce U.S. Customs regulations, and said rules of
origin — which he said are generally in compliance with textile industry requests — still must be
enforced by Customs. He also mentioned that KORUS is the first agreement negotiated by USTR that
provides for immediate duty phase-outs of the majority of sensitive products, and pointed out that
higher tariffs generally for textiles and apparel compared with most manufactured products make the
called-for immediate phase-outs “a much bigger hit, particularly when the product is sensitive.”
December 7, 2010
