ST. PAUL (March 13, 2012) — A new trade agreement that goes into effect this week will increase trade opportunities for Minnesota companies that send exports to South Korea.
Under the United States-Korea Free Trade Agreement, nearly 80 percent of U.S. exports of consumer and industrial products to South Korea will become duty free, effective March 15. Nearly 95 percent of the products exchanged by the two countries will become duty free within five years, and most remaining tariffs will be eliminated within 10 years.
“This is the most commercially significant free trade agreement for the United States in more than 16 years,” said Katie Clark, executive director of the Minnesota Trade Office. “The agreement will have a big impact on Minnesota companies, which sent $702 million worth of products to South Korea last year.”
South Korea is Minnesota’s sixth-largest export market, led by sales of such products as machinery, computers and electronics, and food. Minnesota exports to South Korea were up nearly 26 percent in the last three months of last year, the biggest increase for any of the state’s top export markets in the fourth quarter.
Gov. Mark Dayton led a nine-day trade mission to South Korea last fall to strengthen ties and build relationships designed to increase trade opportunities for Minnesota companies in the country. While in Seoul, Gov. Dayton and his delegation met with the Korean trade minister and the Korean International Trade Association to further collaboration and create inroads for Minnesota companies. Last spring, then-Korean Ambassador Duk-soo Han met with Gov. Dayton at the state Capitol in St. Paul.
For agricultural products, the trade agreement will immediately eliminate or phase out tariffs and quotas on a broad range of agricultural products, with almost two-thirds (by value) of South Korea’s agricultural imports from the United States becoming duty free upon entry.
Minnesota pork products, in particular, have seen strong growth in the country, climbing 34 percent from a year ago to $23 million during the fourth quarter.
The agreement also is expected to improve opportunities for manufacturing, investments, financial services, government procurement and environmental commitments.
In the area of financial services, the agreement will increase access to the South Korean market and ensure greater transparency and fair treatment for U.S. suppliers of financial services. The trade agreement will address non-tariff barriers in a wide range of sectors and includes strong provisions on competition policy, labor and environment, and transparency and regulatory due process.
Overall, the U.S. International Trade Commission estimated the agreement on goods alone will add $10 billion to $12 billion in U.S. gross domestic product and about $10 billion in annual exports to South Korea.
MTO, an office of DEED, is focused on increasing state export sales in foreign markets. MTO promotes international trade by providing export information, export education and training, and one-on-one counseling to Minnesota companies that wish to sell manufactured goods and services in the international marketplace.
DEED is the state’s principal economic development agency, promoting business recruitment, expansion and retention, workforce development, international trade and community development. For more details about the agency and our services, visit us atwww.PositivelyMinnesota.com. Follow us on Twitter atwww.twitter.com/PositivelyMN.
On Thursday U.S. Agriculture Secretary Tom Vilsack described the agreement as a monumental day for American farmers and ranchers. He expect additional barriers to fall as more U.S. businesses market products to Korea’s expanding economy, generating revenues and jobs.
“For America’s farmers, ranchers, and agricultural businesses the timing could not be better,” Vilsack said. “U.S. agriculture is currently experiencing one of its best periods in history thanks to the productivity and resourcefulness of American farmers and agribusinesses.”
Vilsack said that strengthening partnerships with growing markets in the Asia Pacific region, such as South Korea, is integral to the strength of the U.S. economy in the decades ahead. Along with other efforts to promote American exports, he said the trade deal with South Korea helps level the playing field for American businesses and will help put folks back to work.
“Across the economy, it will add $10 billion to $12 billion to annual U.S. Gross Domestic Product,” he said. “Increased exports mean higher incomes for farmers and ranchers, more opportunities for small businesses owners, and jobs for people in rural communities and port cities — the people who grow, package, ship and market American agricultural products.”
U.S. Secretary of State Hillary Rodham Clinton and Republic of Korea Foreign Minister Kim Sung-hwan discussed the agreement in public last Friday in Washington, D.C.
Clinton said the U.S. has been consulting very closely and coordinating on a range of issues now for several years. She said Korea is an economic, political, and strategic leader, not only in the Asia Pacific, but around the world.
“Today, once again, we discussed ways that we are strengthening our alliance, which is a lynchpin of America’s strategic engagement in the Asia Pacific,” Clinton said. “We spoke about our recent diplomacy with North Korea. And I want to be very clear: Any effort by anyone to drive a wedge between the United States and the Republic of Korea will fail. We consult closely on all aspects of our diplomacy. This will not change.
Clinton said the two discussed the importance of coordinating closely with Japan, and plan to hold a trilateral meeting soon. They also discussed the recent agreement by the DPRK to implement a moratorium on long-range missile launches, nuclear tests, nuclear activities at Yongbyon, including uranium enrichment.
“The North also agreed to the return of IAEA inspectors to verify and monitor the moratorium on uranium enrichment activities, and to confirm the disablement of the five-megawatt reactor and associated facilities,” Clinton added. “This is a modest step in the right direction, and we will be watching closely and judging North Korea’s leaders by their actions.”
The two officials discussed the U.S. announcement to provide 240,000 metric tons of nutritional assistance for the most vulnerable populations in North Korea. Clinton said her team just met in Beijing with North Korean officials to discuss the administrative details of this program, and we are working to move it forward soon.
“This is an important time for our critical partnership,” Clinton said. “In just six days, our free trade agreement will take effect, opening up new opportunities for jobs and commerce between our people. We believe that this agreement will create tens of thousands of jobs in both of our countries. And later this month, President Obama will travel to Seoul for the Nuclear Security Summit, where we will continue our efforts to prevent weapons of mass destruction from falling into the wrong hands.”
Kim described the dialogue as a fruitful consultation on a wide range of issues. He said The ROK-U.S. alliance is considered to be in its best ever shape.
“It has been the cornerstone of peace and prosperity on the Korean Peninsula and Northeast Asia for the last 60 years based on our common values and convictions, namely free democracy and market economy,” Kim said.
The ROK-U.S. strategic alliance is broadening and deepening itself since the adoption of the joint vision for the alliance in 2009, said Kim, who reaffirmed this strategic alliance would expand to address the issues on the Korean Peninsula and in Northeast Asia as well as global issues on the basis of our common values.
On the topic of the North Korea nuclear issue, Kim reaffirmed the Republic of Korea’s position that it welcomes the result of the U.S.-DPRK discussions that took place in Beijing last month. He said his government appreciated the close ROK-U.S. coordination that was intact throughout the dialogue process between Washington and Pyongyang.
“Furthermore, we shared the view that the outcome of the recent Beijing discussions is a meaningful first step towards resolving the North Korea nuclear issue, and underscored that faithful implementation of the necessary measures such as moratorium on Yongbyon nuclear activities and the return of IAEA inspectors is important,” Kim said. “Secretary Clinton emphasized that there will not be a fundamental improvement of relations between Washington and Pyongyang without an improvement of inter-Korean relations. And we both agreed that dialogue should be promoted and relations should be improved between the two Koreas.”
Kim said that North Korea’s recent denunciations of the South are an attempt to render influence on the elections and the domestic politics of the ROK, and that they have relevance to North Korea’s own internal situations. He and Clinton agreed to continue close communication on this situation.
“Secretary Clinton and I agreed that continued coordination between the ROK and the U.S. will be the single most important factor in the coming discussions on the resumption of the Six-Party Talks, and we agreed to communicate closely at each level through channels such as the ROK-U.S. summit meeting that is scheduled to take place during the Seoul Nuclear Security Summit,” he added.
On the KORUS FTA topic, Kim said it has upgraded the alliance to a higher level. He and Clinton agreed to cooperate toward early realization of the tangible benefits, such as job creation, expansion of trade, and sharpening of our competitiveness. He said the two also agreed on a comprehensive strategic alliance that goes beyond East Asia into global issues of nonproliferation, Iran, nuclear security, terrorism, development cooperation, human rights, and the environment.
“In particular, we are working together for the success of the second Nuclear Security Summit to be held in Seoul this month, building upon the accomplishments we had at the last Washington summit,” he said.
“Furthermore, Secretary Clinton and I shared the view that for a sustained development of the relationship between our two countries, support from the people of both nations is vital, and that both governments will make active efforts to this end.”