The Proposed U.S.-South Korea Free Trade Agreement (KORUS FTA): Provisions and Implications

On June 30, 2007, U.S. and South Korean trade officials signed the proposed U.S.-South Korean Free Trade Agreement KORUS FTA for their respective countries. If approved, the KORUS FTA would be the second largest FTA that South Korea has signed to date, after the agreement with the European Union EU. It would be the second largest next to North American Free Trade Agreement, NAFTA in which the United States participates. South Korea is the seventh-largest trading partner of the United States and the United States is South Koreas third largest trading partner. Various studies conclude that the agreement would increase bilateral trade and investment flows. The final text of the proposed KORUS FTA covers a wide range of trade and investment issues and, therefore, could have substantial economic implications for both the United States and South Korea. The agreement will not enter into force unless Congress approves implementation legislation. The negotiations were conducted under the trade promotion authority TPA, also called fast-track trade authority, that the Congress granted the President under the Bipartisan Trade Promotion Act of 2002 P.L. 107-210. The authority allows the President to enter into trade agreements that receive expedited congressional consideration no amendments and limited debate. The Bush Administration did not send draft implementing legislation to Congress. The Obama Administration has not indicated if and when it will send the draft implementing bill to Congress. The Administration has stated that it is developing benchmarks for progress on resolving concerns it has with the KORUS FTA, particularly over market access for U.S. car exports.