South Korea Passes KORUS

The South Korean National Assembly passed legislation last week ratifying the Korea-United States
free trade agreement (KORUS). After KORUS was passed by the U.S. Congress and signed by President
Barack Obama in October 2011, South Korea President Lee Myung-bak and his country’s ruling Grand
National Party had been attempting to get the agreement ratified, but had faced strong opposition
from several parties, mainly over the inclusion of an investor-state dispute settlement provision
as well as the agricultural impact on Korean farmers.

KORUS is the United States’ first FTA with a major Asian economy and the first since the
North America Free Trade Agreement with a country that has a large developed textile sector that
exports significant amounts of textile products to the United States. The U.S. textile and apparel
industry’s reaction to KORUS has been mixed. Proponents of KORUS, such as retailers and importers,
say the agreement would create jobs and reduce trade barriers, making it easier for U.S. companies
to export their goods overseas. Opponents of KORUS, such as U.S. textile manufacturers, charge that
rather than creating jobs, the FTA would result in continued outsourcing and destroy jobs, because
U.S. and Korean textile products are not treated equally under the agreement and removal of certain
textile enforcement measures would enable significant illegal duty-free transshipments of
Chinese-made goods. Additionally, KORUS requires the United States to reduce tariffs more quickly
than South Korea, and opponents are concerned this does not allow U.S. suppliers the chance to
adapt, and would favor the Korean industry in key products.

South Korea is the fifth-largest exporter of textile products to the United States, reports
the United States-based National Council of Textile Organizations (NCTO); and the 10th-largest
market for U.S. textile and apparel exports, reports the U.S. Department of Commerce’s
International Trade Administration.

United States Trade Representative (USTR) Ambassador Ron Kirk issued the following statement
on South Korea’s passage of KORUS:

“The United States welcomes the Korean National Assembly’s approval of the KORUS FTA. This is
a win-win agreement that will provide significant economic and strategic benefits to both
countries. We look forward to working closely with the government of Korea to bring the agreement
into force as soon as possible.”

November 29, 2011