A pending free-trade agreement between the United States and Korea would increase U.S. exports by $10-$11 billion annually to a nation that has become Massachusetts’ ninth largest trading partner, two trade experts told the AIM International Business Council recently.
Won-Kyong Kim, Counselor for Economic Affairs at the Korean Embassy in Washington, and Sean Connell, Director for Japan and Korea in the International Division of US Chamber of Commerce, said the free-trade agreement under consideration in Congress would eliminate tariffs within four years on 96 percent of US goods shipped to Korea. That would match a similar agreement between Korea and the European Union scheduled to take effect on July 1.
The Korea/US trade agreement enjoys broad support in Congress, where senators Scott Brown and John Kerry both support the deal. But prospects for passage dimmed this week when some lawmakers threatened to block the agreement with Korea if Congress does not simultaneously take up more controversial proposed trade alliances with Colombia and Panama.
“I made it clear to Assistant Secretary of State Valenzuela that there would be an effort to defeat the South Korea Free Trade Agreement if there was not similar progress on Colombia and Panama,” Florida Republican U.S. Rep. David Rivera said on Tuesday. “The Obama administration is calling for quick passage of the free-trade agreement with South Korea while ignoring long-pending agreements with Colombia and Panama.”
Kim and Connell spoke to an audience several dozen Massachusetts executives from companies such as Raytheon, Doble Engineering, Sovereign Bank, Morrissey & Co., Dresser Inc., Flow Technologies and Hagan & Co.
Exports from Massachusetts to Korea, the two experts said, increased 43 percent during 2010 to $900 million. Boston also receives significant economic benefit from some of the 200,000 Korean students currently studying at American colleges and universities.
The proposed free-trade agreement would eliminate tariffs that average 11.2 percent for US goods going to Korea and 3.7 percent on US imports of Korean goods. The agreement would be particularly good for the US service sector, including financial services, telecom, broadcast, express delivery and legal services (currently US law firms cannot establish offices in Korea.) Non-tariff barriers will also be eliminated.
The bottom line: a $10 billion-$12 billion jump in gross domestic product and creation of at least 70,000 jobs.