CRS Says EU-South Korea FTA May Affect U.S. Debate on KORUS FTA
The Congressional Research Service has issued a report (R41534) entitled, "The EU-South Korea Free Trade Agreement and Its Implications for the United States."
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KOREU FTA Does Not Cover as Broad a Range of Trade as KORUS FTA, Etc.
CRS states that the KOREU FTA is similar to the proposed KORUS FTA in many respects. Both agreements are comprehensive and would eliminate tariffs on most trade in goods soon after they enter into force. However, the phase-out periods for tariffs on some manufactured goods in the KOREU FTA differ from the KORUS FTA.
In addition, the KOREU FTA does not cover foreign direct investment. Unlike the KORUS FTA, the KOREU FTA would not allow trade sanctions to be applied where violations of the workers’ rights, and environment provisions have been deemed to occur. In addition, the KORUS FTA would cover a broader range of trade in services than would the KOREU FTA.
CRS notes that it is not clear whether these differences in the structures of the FTAs would result in appreciable differences in outcomes in terms of economic gains and losses.
U.S. Businesses Argue Enactment of KOREU Before KORUS is a Disadvantage
According to the report, business representatives have argued that enactment of the KOREU FTA before enactment of the KORUS FTA would give European competitors commercial first mover advantages, since EU firms, such as those in the auto industry or the services sector, could gain greater market opportunities in South Korea not afforded to U.S. firms. However, other factors could also mitigate such advantages, for example, U.S. multinational firms operating in the EU could benefit from the KOREU FTA.
KOREU FTA Could Influence U.S. Congressional Debate on KORUS FTA
CRS states that the content and fate of the KOREU FTA could influence the pace and tone of any debate in the U.S. on the KORUS FTA in the 112th Congress.
(See ITT's Online Archives or 01/26/11 news, 11012633, for BP summary of the House Ways and Means Committee hearing on pending KORUS FTA, etc.)