Contents

U.S. : The world’s largest nation

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  The U.S.’s GDP is 14.7 trillion dollars(2010, top of the world), it forms about ¼ of the volume of the world’s economy

  The U.S. registered negative growth in 2008~2009 because of the global financial crisis, - from the economic recovery it posted positive growth 3% in 2010

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GDP(trillion $) rate of growth(%)

Recent economic condition

  Korea’s rate of economic growth slowed down in 2008~2009 because of the global economic crisis - As the business is recovering rapidly, the rate of economy in Korea was 6.2% in 2010

  Fitch, top three credit-rating agency, upgraded Korea’s credit rating prospect from “Stable” to “Positive” in November 2011

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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

GDP (billion $) rate of growth(%)

Korea : Dynamic economy Recent economic situation

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  Korea’s export toward the U.S. decreased dramatically in 2009 as the demand in the U.S. reduced owing to the economic recession - But as the world’s economy has recovered gradually, Korea’s export toward the U.S. made a new record in history

  Korea has kept an active trade balance continuously

《Korea’s trade with the U.S.》

(million $) 2005 2006 2007 2008 2009 2010

Total turnover 71,929 76,838 82,985 84,742 66,689 90,219

Exports 41,343 43,184 45,766 46,377 37,650 49,816

Imports 30,586 33,654 37,219 38,365 29,039 40,403

Trade balance 10,757 9,529 8,547 8,012 8,610 9,413

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Recent trade-status

Trade status between Korea-U.S.

 The United States is the biggest investor in Korea as a single country - The United States accounts for 15.1% of FDI into Korea.

The US.’ investment in Korea focuses on the fields of wholesale /retail trade, financial services and electric and electronic services

《The U.S.’ investment into Korea》

(million $) 2006 2007 2008 2009 2010 Sum (‘06~’10)

Total FDI inflows(A) 11,247 10,516 11,712 11,484 13,070 58,029

U.S. → Korea(B) 1,711 2,329 1,328 1,486 1,974 8,828

Ratio(B/A) 15.2% 22.1% 11.3% 12.9% 15.1% 15.2%

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Recent invest-status

Trade status between Korea-U.S.

  The United States is the biggest investment country of Korea - Korea invested 3,555 million dollars in 2010, it accounts for 14% of the Korea’s total FDI

Korea’s investment in U.S. focuses on the fields of mining, manufacturing, wholesale/retail trade and financial & insurance services

《Korea’s investment into U.S.》

(million $) 2006 2007 2008 2009 2010 Sum (‘06~’10)

Total FDI inflows(A) 11,620 22,219 23,843 20,084 23,159 100,925

Korea → U.S.(B) 2,202 4,423 6,233 3,910 3,555 20,323

Ratio(B/A) 18.9% 19.9% 26.1% 19.5% 15.4% 20.1%

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Recent invest-status

Trade status between Korea-U.S.

Product Amount (million $)

Ratio (%)

1 Communication devices

9,164 18.4

2 Autos 6,615 13.3

3 Auto parts 3,910 7.8

4 Petroleum, bituminous oil

3,460 6.9

5 Computer parts 2,439 4.9

6 Semiconductors 1,291 2.6

7 Tires 1,181 2.4

8 Steel pipes 948 1.9

9 Refrigerators 907 1.8

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Aircraft parts 818 1.6

product Amount (million $

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Ratio (%)

1 Semiconductor manufacturing devices

2,768 7.1

2 Aircrafts 1,590 4.1

3 Semiconductors 1,583 4.1

4 Corn 1,423 3.7

5 Semiconductor devices

1,102 2.8

6 Scrap iron 1,035 2.7

7 Machinery components

820 2.1

8 Coal distillates 697 1.8

9 Country-specific special provision items

602 1.5

10 Aircraft parts 580 1.5

[Korea’s top 10 Exports to the U.S.] [The United States’ Top 10 Exports to Korea]

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The chief items export-import between two countries

Trade status between Korea-U.S.

  The U.S. is pursuing FTAs in order to overcome slowing of the economy and reinforcement of the global trade system since its first FTA with Canada and Mexico in 1994

  It signed 14 FTAs, and U.S. Congress approved FTAs with Korea, Panama and Colombia recently(2011.10)

Already signed(14) Under negotiations(6)

Under investigation(7)

NAFTA, CAFTA-DR Morocco, Bahrain, Singapore, Oman, Jordan, Israel, Chile, Colombia, Panama, South-Korea, Peru, Australia

FTAA, SACU, Malaysia, UAE, Ecuador, Thailand

TPP, New Zealand, Taiwan, Vietnam, Egypt, Kuwait, Pakistan

U.S’s FTAs Status

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FTAs’ Status

  Korea is pursuing FTAs simultaneously and comprehensively in order to overcome the disadvantage as the offshore nations and maximize the FTAs’ economic effect since its first FTA with Chile in 2003

  It signed 8 FTAs, since Korea Assembly has approved FTAs with U.S. in November 2011

Already signed(8) Negotiating(7) Investigating(10) Chile, Singapore, EFTA, ASEAN, India, EU, Peru, U.S.

Canada, Mexico, GCC, Australia, New Zealand, Colombia, Turkey

Japan, China, Korea-China-Japan, Israel, Mid-America, MERCOSUR, Vietnam, Mongolia, Malaysia, Indonesia

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Korea’s FTAs Status

FTAs’ Status

  2006. 2.3 : Initiation of Korea-U.S. FTA negotiations   2006.6.5~2007.3.12 : Completion of eight rounds of negotiations   2007.6.30 : Signing of Korea-U.S. FTA   2010.12.3 : Completion of additional negotiations   2011.2.10 : Signing of legal texts reflecting agreements made in December 2010  2011.10.12 : Clearing FTA with Korea in the U.S. Congress  2011.11.22 : Approving FTA with the U.S. in Korea assembly   2012~ : Being taken effect Korea-U.S. FTA

Progress made to date

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To abolish tariff of the most items within 5 years - It’s expected to increase the trade between Korea & U.S. effectively

Industrial Products

Agriculture

Services

To abolish most items’ tariff within 10 years - In order to protect some sensitive items, Two countries decided to admit exceptional treatment such as “ Agricultural Safeguard Measures”

All kinds of services are subjects to apply “Korea-U.S. FTA” - except to gambling, financial service, air transportation service, government procurement/subsidy/service

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Main Contents in the agreement Comprehensive Korea-U.S. FTA which it contains various sectors

  To eliminate almost items’ tariff within 5 years - (Korea) 94% within 3 years, 96.1% within 5 years - (U.S.) 92% within 3 years, 94.9% within 5 years

[Concession types of the main industrial commodities]

※ ( ): tariff rate

year Korea U.S.

Immediate Auto parts(3~8), Aircraft engines(3), Rear-view mirrors(8), etc.

Auto parts(1.3~10.2), LCD monitors(5), Color TV(5), Shoes(8.5), Light bulbs(2.6) 등

3yrs Urea(6.5), Silicone(6.5), Polyurethane(6.5), Perfume(8), Golf dubs(8), etc.

DTV(5), Golf equipment(4.9), Chandeliers(3.9), etc.

5yrs Autos(8), Aluminum plates(8), razor blades(8), Hair conditioners(8), etc.

Tires(4), Leather apparel(6), Speakers(4.9), Polyether(6.5), etc.

10yrs Basic skincare products(8), Contact lenses(8), Phenol(5.5), etc.

Microwaves(2), Washing machine(1.4), Imitation accessories(11), etc.

over 10yrs Special footwear(20~55.3)

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Goods

Main Contents in the agreement

  To provide a service provider of the partner country with 4 duties

National Treatment Most Favored Nation Treatment To prohibit the limitation of the market access To prohibit putting the duty local presence

  To make a system to discuss MRA* about professional service * MRA(Mutual Recognition Agreement)

  To admit the regulation authorization about the services which have strong publicness such as public education

  To open the professional service* by stages * judicial affairs, accounting and tax

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Main Contents in the agreement Service and Investment

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- Korea will dominate the U.S. market in advance than any other Asian countries such as Japan, China

- Korea-U.S. FTA will contribute to the Korea’s economic growth and development of the industry structure

◎  “We will take the advantageous position first to the world’s best market, and increase the exports and jobs” -President Lee Myung-bak

- “This trade agreement will make it easier for the U.S. companies to sell their products in South Korea and provide a major boost to our exports” : President Obama

- “It is valuable that Korea-U.S. FTA will strengthen the strategic alliance relationship between two countries” : New york Times

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Evaluation about Korea-U.S.FTA

  - Japanese are worried that their economy might be at

a serious disadvantage as Korea will take beneficial position first to the U.S. market

Prime Minister Noda announced that Japan will participate TPP* negotiation(November 2011) * TPP: Trans-Pacific Partnership

- It concerns China that the more relationship between Korea & U.S. is strengthened through this agreement, the less relationship with China is weakened

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Evaluation about Korea-U.S.FTA

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Utilization plan of Korea-U.S.FTA FTA Utilization policy

  Korean Government is implementing diverse policies in order to maximize “FTAs’ positive effects” - Holding the conference and operating education program to enhance the understanding about FTA

[The government’s activities to activate Korea-EU FTA]

  Government held the presentation meeting in Hungary to offer practical information to local companies (March, 2011)

  Government held the conference to assist companies in pushing into the EU market

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Future Plan

Utilization plan of Korea-U.S.FTA

  When Korea-U.S. FTA is taken into effect in January 2012, the government will hold the presentation meeting in the U.S. - to provide local companies with useful information (Rules of Origins and Customs Clearance, etc.)

  Cooperating with AMCHAM, the government will make an effort to offer information relating to increase the trade between two countries