Issues in U.S. - ROK Economic Relations

Abstract

This paper builds on the analysis of Kiyota and Stern (2007) of the economic effects of a Korea-U.S. free trade agreement (KORUSFTA). We review the objectives and main features of the KORUSFTA as perceived prior to the negotiation of the agreement and then outline the main features of the actual KORUSFTA that was concluded at the end of June 2007 and is now awaiting legislative approval by the authorities in both nations. We summarize the results of a modeling study by the USITC (2007) that is based on the changes in bilateral tariffs and tariff rate quotas (TRQs) that were actually negotiated in the KORUSFTA. We also present for comparative purposes our earlier results from Kiyota and Stern (2007) that used the pre-negotiations data and some specially constructed estimates of services barriers. Finally, we presents some calculations of the effects of alternative negotiating options that may be considered especially if it turns out that the KORUSFTA is not approved by either or both Korea and the United States. Original version presented at The Annual Symposium of the Korea Institute for International Economic Policy (KIEP) and the Korea Economic Institute (KEI) in cooperation with the Korean Studies Institute (KSI), University of Southern California, “Towards Sustainable Economic & Security Relations in East Asia: U.S. & ROK Policy Options,” September 26-28, 2007,University of Southern California, Davidson Conference Center, Los Angeles, California.