KORUS FTA, a new free trade agreement between the United States and South Korea, will take effect March 15th. It will eliminate 95% of tariffs on consumer products over the next five years, including immediately eliminating trade protections on heavy textiles and footwear. This is expected to generate an additional $10 billion in total exports annually to South Korea, a 10% increase.
The agreement will allow the United States to import South Korean textiles and apparel duty-free, provided they are woven from regionally sourced yarns.
Concerns over competition from the robust Korean apparel sector were somewhat allayed by the passage of a corresponding trade adjustment act. This act will provide technical assistance and additional financing for businesses experiencing competition from imports. There is also an option for Congress to reinstate trade protections if it appears the Koreans are flooding the market with underpriced goods.
The agreement was brokered under the administration of President George W. Bush, but saw little movement since 2007. Under the Obama administration plan to double exports by 2015, the agreement was dusted off and rapidly pushed through in October 2011. It represents a rare instance of bipartisan cooperation and is expected to improve medium-term prospects for US manufacturing, according to a statement issued by the American Apparel and Footwear Association.