United States And South Korea Negotiate On FTA

On June 9, the United States and
South Korea concluded an initial round of negotiations on a free trade agreement (FTA) with no
progress reported on textile and apparel issues. While saying the negotiators made progress in a
number of areas, Assistant US Trade Representative Wendy Cutler conceded that a good deal of work
needs to be done if negotiators are to meet their goal of completing an agreement by the end of
this year.

Textiles and apparel are expected to be among some of the most contentious issues. While US
textile manufacturers would rather not have an agreement at all, they say that if an agreement is
pursued, it should have a yarn forward rule of origin, an effective short supply mechanism, no
tariff preference levels and no cumulation that would allow inputs from countries that have FTAs
with the United States.

Textile importers, on the other hand, are seeking flexibility that would encourage more
trade not only with South Korea, but also with other countries. Julia Hughes, vice president for
international trade and government relations for the New York City-based United States Association
of Importers of Textiles and Apparel, said the Korean agreement presents an opportunity to develop
a network between Korea and other countries that have FTAs with the United States, and those
linkages would result in more trade in areas where the United States is committed to encouraging

Cutler said the progress to date is “encouraging,” and she feels it will be possible to meet
the December goal for completing the agreement. That date is important because US trade negotiators
want to win congressional approval before the President’s Trade Promotion Authority expires next

Another round of negotiations is scheduled July 10 in Seoul, and other talks will continue
throughout the summer and fall.

June 13, 2006