Chairwoman Pelosi's Announcement Before Departing for Asia Tour Including Korea
[Asia Economy International Department Reporter] The U.S. Congressional Research Service (CRS) has released a report expressing the need for improvements in certain areas of the Korea-U.S. Free Trade Agreement (FTA), including e-commerce.
The report, titled "The Korea-U.S. FTA and Bilateral Trade Relations," also includes the U.S. position on the Indo-Pacific Economic Framework (IPEF), which South Korea has agreed to join under U.S. leadership.
Since the FTA came into effect, South Korea has recorded an annual trade surplus with the U.S., while the U.S. has also benefited from more than a threefold increase in foreign direct investment (FDI) from Korean companies.
The report stated, "Supporters of the FTA argue that the agreement has expanded trade, investment, competition, and consumer choices for both countries, increased the level of U.S. intellectual property rights (IPR) protection in South Korea, and improved transparency in South Korea's regulatory procedures." It added, "On the other hand, some point to the increase in the U.S. trade deficit with South Korea after the agreement's implementation, claiming the FTA's impact has been disappointing."
However, the report noted, "The majority of economists dispute this," explaining that scholars believe macroeconomic variables, rather than the agreement itself, are the main factors influencing the bilateral trade balance.
For example, the sharpest increase in automobile exports, which constitute a significant portion of South Korea's exports to the U.S., occurred up to 2015, before the 2.5% tariff on Korean automobiles was eliminated by the FTA.
Regarding this, the report said, "Generally, scholars consider trade balance a poor measure of an FTA's success," and suggested that questions such as "What is the best way to evaluate the Korea-U.S. FTA?" could become key issues.
The report also pointed out that although the Korea-U.S. FTA covers a wide range of areas, it is limited in issues like e-commerce compared to more recent agreements the U.S. has signed, noting that "some stakeholders are calling for a renewal of the agreement."
Meanwhile, the report emphasized that the Korea-U.S. FTA was originally concluded to deepen economic ties and strengthen the alliance between the two countries.
It also expressed expectations that, with South Korea's participation in IPEF, the two countries could strengthen their economic relationship beyond the FTA.
This report was released on the 31st of last month, four days before U.S. House Speaker Nancy Pelosi embarked on her Asia tour, including a visit to South Korea.
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