The US-South Korean Free Trade Agreement went into effect in March of 2012, approximately a year and a half ago. At the time of signing it was a groundbreaking step in redefining U.S. economic engagement in the region. For the United States the treaty marked the very first free trade agreement with a major industrial power in Asia. For South Korea the agreement signaled the second-largest trade agreement behind an existing partnership with the EU. Understandably, an American free trade agreement with the Republic of Korea makes sense, considering the strong military and civilian ties that have existed between the two nations since the Korean War and the strategic emphasis the Obama administration has placed on the Pacific Rim. After 18 months, it seems appropriate to pause for a moment and examine what the agreement has helped to accomplish for both nations and how business have benefitted or suffered from the legislature.
A snapshot of the present
Overall, export and manufacturing data indicates, that the free trade treaty has stimulated businesses across all sectors of the U.S. economy.
- Manufacturing: American manufactured goods exports to South Korea, for instance, have grown by approximately $2.5 billion, due particularly to increased sales of transportation equipment, aircraft and aircraft parts, and passenger vehicles.
- Agriculture: The agreement’s tariff reductions also stimulated agricultural exports to Korea, with significant increases in the export of orange juice (130%), grape juice (128%), wine (57%), soybeans (48%) and wheat products (38%).
- Service: As a result of, product exports, service sector ties to South Korea have intensified over the last 18 months and increased the overall business volume to upwards of 18 $18 billion. This 9% growth is largely due to robust gains in telecommunication, e-commerce, and international parcel delivery services.
A glimpse of the Future
While the above data signifies an encouraging start, they may well be the beginning of a longer-term shift in U.S. economic policy in the region. Similarly, South Korean officials are pursuing a similar course and have announced that tariffs on 95% of US industrial and consumer goods will be completely eliminated by 2016. Overall, there are many aspects of the agreement that promise long-term success and growth on both sides of the Pacific and that is, after all, what the treaty is designed to accomplish.
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