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United States-Korea free trade agreement, negotiation outcomes

United States-Korea free trade agreement

The presidents of the United States and South Korea on 24 September 2018 signed a revised United States-Korea free trade agreement. In connection with the signing, the Office of the U.S. Trade Representative (USTR) issued a “fact sheet” about negotiations concerning the U.S.-Korea free trade agreement.

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The USTR fact sheet reports the following:

  • Korea will extend the phase out of the 25% tariff on trucks until 2041, or a total of 30 years following the implementation of the free trade agreement in 2012 (currently scheduled to phase out by 2021). 
  • Exports of U.S. motor vehicles to Korea will be improved through: 
    • Korea will double the number of U.S. automobile exports to 50,000 cars per manufacturer per year that can meet U.S. safety standards (in lieu of Korean standards) and enter the Korean market without further modification.
    • U.S. gasoline engine vehicle exports will be able to show compliance with Korea’s emission standards using the same tests they conduct to show compliance with U.S. regulations, without additional or duplicative testing for the Korean market.
    • Korea will recognize U.S. standards for auto parts necessary to service U.S. vehicles, and reduce labeling burdens for parts.
    • Korea will expand the amount of “eco-credits” available to help meet fuel economy and greenhouse gas requirements under the regulations currently in force, while also ensuring that fuel economy targets in future regulations will be set taking U.S. regulations into account and will continue to include more lenient targets for manufacturers that sell small volumes of cars in Korea. 
  • Korea will address long-standing concerns with verification procedures through agreement on principles for conducting verification of origin of exports under the agreement and will establish a working group to monitor and address future issues that arise. 
  • Within 2018, Korea will amend its premium pricing policy for global innovative drugs to make it consistent with Korea’s commitments under the agreement for the non-discriminatory and fair treatment of U.S. pharmaceutical exports.

For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

Doug Zuvich
Partner, Global Practice Leader
T: 312-665-1022
E: dzuvich@kpmg.com

Andy Siciliano
Partner, National Practice Leader
T: 631-425-6057
E: asiciliano@kpmg.com

Irina Vaysfeld
Principal
T: 212-872-2973
E: ivaysfeld@kpmg.com

Robert Waldrop
Principal
T: 212-954-8117 
E: rwaldrop@kpmg.com

Christopher Young
Principal
T: 312-665-3229
E: christopheryoung@kpmg.com

George Zaharatos
Principal
T: 404-222-3292
E: gzaharatos@kpmg.com

John L. McLoughlin
Principal, East Coast Leader
T: 267-256-2614
E: jlmcloughlin@kpmg.com

Luis (Lou) Abad
Principal, WNT
T: 212-954-3094E: labad@kpmg.com

Amie Ahanchian
Managing Director
T: 202-533-3247
E: aahanchian@kpmg.com

Gisele Belotto
Managing Director
T: 305-913-2779
E: gbelotto@kpmg.com

Andy Doornaert
Managing Director
T: 313-230-3080
E: adoornaert@kpmg.com

Jessica Libby
Managing Director
T: 612-305-5533
E: jlibby@kpmg.com

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