Results of FTA
The KORUS (S. Korea and the US) FTA celebrates its 5th anniversary on March 15. Statistical data shows that the free trade agreement has been highly beneficial to both sides.
According to the Korea International Trade Association, the volume of trade between the United States and South Korea increased by an annual average of 1.7% for the past five years. During the same period, South Korea’s overall trade volume decreased by an annual average of 3.5%.
Between 2011 and last year, the share of U.S. products in South Korean markets rose from 8.5% to 10.64%, a 10-year high. Likewise, the share of South Korean products in U.S. markets rose from 2.57% to 3.19%.
In 2015, South Korea posted a trade surplus of US$11.72 billion with the United States. South Korea’s goods trade surplus with the U.S. increased from US$11.64 billion to US$23.25 billion between 2011 and last year while its service trade deficit with the U.S. rose from US$10.97 billion to US$14.09 billion. In 2015 alone, South Korea paid US$6 billion to the United States in intellectual property royalties. When it comes to employment, the KORUS FTA led to the creation of 45,000 new jobs in the U.S. in 2015.
Since the implementation of the FTA, the U.S. has become the second-largest automobile exporter on the part of South Korea. Tariffs on vehicles imported from the U.S., which had been 4% in 2012 to 2015, fell to 0% last year and U.S. car export to South Korea increased by an annual average of 37.3% for the past five years. The share of U.S. cars in the South Korean market jumped from 9.6% to 18.1% between 2011 and 2016. Meanwhile, car export from South Korea to the U.S. declined 11% between 2015 and 2016 although the 2.5% tariff of the U.S. was eliminated last year.
Before the implementation of the KORUS FTA, South Korea imported most of the hormone drugs for thyroid cancer patients used in the country from Japan and France. Since the 8% tariffs on pharmaceutical products were removed based on the agreement, however, the import of the drugs from the U.S. has skyrocketed by 818% per year on average. Last year, U.S. and Japanese hormone drugs accounted for 28.5% and 17.9% of this market, respectively.