How big is Korea?

• Korea is roughly the size of Indiana

• With a GDP equal to that of Indiana, Ohio and Michigan

• Korea’s exports equal 2011 exports from: Indiana Ohio Michigan Illinois Pennsylvania Tennessee New York New Jersey and California.

Labor Productivity

High School

Graduation

University Degrees

Hours Worked

GDP per Hour

Worked USD

Compensa-tion

USD/hour

Labor Productivity Growth Rate

Korea 98 % 21 % 2,193 $ 27.20 $ 15.16 6.4 %

Mexico 39 % 15 % 1,866 $ 19.80 $ 6.71 1.8 %

USA 87 % 40 % 1,778 $ 59.00 $ 33.21 3.0 %

Japan 41 % 1,773 $ 39.40 $ 20.68 3.2 %

Germany

85 % 25 % 1,419 $ 53.60 $ 28.26 1.4 %

Source: OECD

Korea is hungry for technology

• Following others is the fastest route to development

• Korea today is approaching the frontiers of technology

• Innovation and invention are difficult – for everyone

• Korea is investing in R&D as never before

• A growing portion of Korea’s government budget goes to R&D

• Korea is determined to get the technology it wants

• Your Intellectual Property is very valuable

Important, and true

• Korea is clean, safe, and well-organized• Intellectual Property protection is pretty good• Legal recourse is expensive, much more predictable

than in many nations, and improving• Korea is 43rd in Transparency International’s

Corruption Perceptions Index• Korean industry is skilled at tweaking improvements

to technology

A Zero-Sum tradition• If you are benefiting, then I am losing• Negotiations are always hard-fought. The important

point to remember is that negotiations in Korea are never over.

• Under Korean law, a contract is not an iron-clad commitment. It cannot be broken because it is flexible.

• Win-win thinking is not the norm.• Some observers have commented: “Every game is

an away game.”

KORUS FTA:A Well-Timed Opportunity

• Korea and the U.S. have worked together closely for more than half a century

• Korea has rapidly become an important player on the world stage – economically, politically, and socially

• Korean consumers want to buy the best, and their companies make highly competitive partners

• The KORUS FTA is the most important trade agreement for U.S. companies since NAFTA

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III. KORUS Overview and Key Provisions

Over 95% of trade in consumer and industrial products duty-free within 5 years

Tariff and non-tariff barrier reductions for agricultural products Increased access for U.S. autos, including unprecedented provisions

to address non-tariff barriers in Korea Further market access for U.S. service providers State-of-the-art protections for intellectual property Expanded access to Korean government procurement contracts New protections for U.S. investors Investor-State Dispute Settlement mechanism to help investors

address violations of the KORUS investment chapter

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Unique Provisions of the Agreement

Autos

Allows U.S. automakers that exported fewer than 25,000 motor vehicles to Korea in the previous year to export vehicles that comply with U.S. safety standards rather than the Korean standard

Adjustments to general auto and truck tariffs give U.S. auto companies and American workers the opportunity to increase sales in Korea before U.S. tariffs on Korean autos come down

Korea immediately reduced its electric car tariffs from 8 percent to 4 percent and will phase out its tariffs by the fifth year

A special autos safeguard allows the United States to address auto imports that are causing, or threatening to cause, injury to the U.S. auto industry

Pharmaceuticals/Medical Devices

Requires fair, non-discriminatory procedures in reimbursement and pricing Establishment of a Medicines and Medical Devices Committee

KORUS: Non-Tariff BarriersKORUS Non-Tariff Barriers Provisions

• Strong provisions on how Korea will develop regulations impacting U.S. exports

• Benefits to American manufacturers including greater input into the development of– standards– technical regulations– conformity assessment procedures

• Increased transparency and opportunity for public input• Beneficial to small and medium-sized enterprises with

limited resources

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IV. Benefits of KORUS to U.S. Businesses

KORUS Levels the Playing Field Korea’s applied tariffs on industrial goods average 6.2 percent, while

U.S. tariffs on Korean goods average 2.8 percent

Small and Medium Size Enterprises and KORUS The transparency provisions help small and medium size companies

that may not have the resources to navigate customs and regulatory red tape

Investors Establishes a secure and predictable legal framework for U.S.

investors in Korea

Service Providers Improved access for U.S. service providers, including telecom,

express delivery, legal, financial, and many others

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V. KORUS Entry-Into-Force

Before entry-into-force: Korea’s average duty was almost 13 percent

KORUS entry-into-force: March 15, 2012

Day 1 (March 15): U.S. exports face no tariffs in Korea on 80 percent of all products. With a few exceptions, within 2 and 15 years, all other remaining products will become duty-free

By year 10: U.S. exports will face no tariffs in Korea on almost 99 percent of all products

Certificate of Origin Requirements• You must prove that your product qualifies for

reduced tariff benefits under KORUS

• Although the Korea Customs Service has an optional certificate of origin form, you are not required under KORUS to use any particular format

• Only requirement: written or electronic certification by the importer, exporter, or producer

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Certificate of Origin ContentsKORUS Chapter 6, Section B, Article 6.15: “Each Party shall provide that a certification need not be made in a prescribed format, provided that the certification is in written or electronic form, including but not limited to the following elements”

1. Name and contact information of certifying person2. Importer of good3. Exporter of good4. Producer/manufacturer of good5. Harmonized System classification and description of good6. Proof of U.S. origin: a) Manufacturer’s written or

electronic certification b) Manufacturer or exporter’s

knowledge7. Date of certification8. Period covered by certification

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Rules of Origin• Transformation rules: inputs are substantially different

from the final product– Ex: Leather and metal parts transformed into a

handbag• Regional value content: the proportion of U.S. and

Korean (“regional”) content exceeds x%, or the proportion of non-regional content is less than y%– Ex: Imported furniture components (not from Korea)

transformed into finished furniture; at least 35% regional or no more than 45% from third countries

• Specific rules by HS code under KORUS

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How to See if Your Product BenefitsGet Help from an Expert – Call the

Department of Commerce Trade Information Center (TIC)

• 800-USA-TRADE (800-872-8723)

The TIC can help with:• U.S.-Korea Trade Agreement rules of origin• Classification of exports to Korea• Identifying applicable tariff rates• Making claims for preferential treatment

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VI. Helpful Resources

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Trade.gov/korus

Export.Gov – KORUS

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export.gov/fta/korea

Export.Gov – FTA Tariff Tool

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export.gov/FTA/ftatarifftool

3 Features of the FTA Tariff Tool• The FTA Tariff Tool combines complex tariff and trade data into a simple

and easy-to-search free public interface. The Tool has three functions:

1. Users can see the current tariff and future tariffs applied to their products, as well as when those products will become duty-free

2. Users can analyze how key sectors are treated under an agreement by combining sector and product groups, trade data, and the tariff elimination schedules

3. Users can compare how particular sectors are treated across various FTAs

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What’s My Tariff?

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Thank you

Joshua PierceInternational Trade Specialist

U.S. Department of Commerce1401 Constitution Ave., NW

Washington, DC 20230

(202) 482-0961Joshua.pierce@trade.gov

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NAM in Cooperation with the Commerce DepartmentCan Assist in Exporting to Korea.

• Help you to identify customers, distributors or agents• Provide trade counseling and how to comply with

requirements• Access to U.S. Department of Commerce’s Services

Get started with one phone call to NAM:

202-637-3407