By Don Southerton, KoreaLegal.org Editor
I recently spoke at the World Trade Center San Diego Asia Desk: Korea workshop. The session centered on business benefits for American companies under the new U.S. Korea Free Trade Agreement. Guest speakers also included KOTRA LA Director- General Yun and Korea University’s Moonsung Kang. Both gave specific details on the new treaty, which was implemented on March 15.
A complex document, the KORUS FTA immediately eliminates some tariffs, with others removed over time.
For example, the tariffs on auto parts manufactured in Korea are removed. With regard to cars, the tariff on US cars shipped to Korea is immediately reduced from 8% to 4%–the remaining 4% to be eliminated in 2 year. For Korean cars shipped to the US, the current 2.5% tariff remains in full effect, but will be eliminated in 2 years.
An aspect of the KORUS FTA is its impact on law and accounting services. In particular, the new FTA allows for US firms to begin consulting Korean firms with regard to foreign law and accounting issues. Over time they will be allowed to hire Korean lawyers and accountants to expand their Korea-based practice.
Finally, perhaps an often overlooked benefit, and outside the business incentives provided by the KORUS FTA, is that free trade agreements strengthen political and security ties between countries. In other words, the treaty should better relations between US and Korea and for business partnerships, I see this as encouraging and positive.
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