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Happy KORUS FTA Day

If you’ve been watching the news, you know that the KORUS FTA went into effect today.

Or as some creative sort at Naver.com put it, “America’s Blitz On Korea Has Begun”:

Sadly, as the Chosun Ilbo pointed out, not all American products will be getting cheaper.

Oh, and just a note—while I appreciate the Kyunghyang’s arguments that some of the discourse about the Jeju naval base is probably unhelpful, I’m not going to hold my breath waiting for it to condemn rhetoric like this and this about the FTA.

About the author: Just the administrator of this humble blog.

  • SomeguyinKorea

    So, no 13% tariffs on clothes imported from the US…What’s the catch? A new 13% processing fee if you order clothes from the US that are valued above the 150$ or so duty free limit?

  • SomeguyinKorea

    …I’m asking because the tariffs posted online are bogus. On top of duty, you have to pay the local sales tax and a handling fee. The posted rate may be 13%, but when all is done you’re out 20%.

  • cm

    This is the first time I’ve heard of local sales tax and handling fee are considered tariffs. Why don’t you include income taxes as tariffs too?

  • SomeguyinKorea

    #3,

    You’re clearly not aware of how the South Korean government handles WTO rulings that aren’t in their favor.

    A few years back, they had such a ruling over their tariffs. They lowered the duty, but slapped the local sales tax and a handling fee, resulting in the same tariffs.

    They also lost their case over the 100% duty imposed on whiskey…so they increased the taxes on soju to 100% of the wholesale price (which raised the price of a bottle of soju a couple hundred won only).

  • cm

    #4 – no I’m not aware of that case. How long ago was this case? The European whisky industry seemed very eager to sign the FTA with Korea though. They backed the trade fully and enthusiastically. Were they fools to back this deal, not knowing there would be other hidden taxes?

    As for clothes, most of the US brands are made in China, Bangladesh, etc, so there aren’t going to be any tariff elimination there. Even if there was, I imagine the Korean retailers won’t drop their prices easily, to protect the brand value. They want that consumer illusion that more the pricier the item, the better quality and prestige it is.

  • DLBarch

    It’s still amazing to me that it’s the Korean side (or at least some vocal opponents on the Korean side) who think this is a bad deal for Korea. As one U.S. Embassy friend confided in me not so long ago, “I don’t understand these protests…we gave Korea almost everything they asked for.”

    Anyway, if the KORUS-FTA is now the law of the land, so be it. Let’s put our efforts on enforcing its feeble provisions, and re-assess a year from now, at which point I have no doubt that the U.S. trade deficit with Korea will have widened, and a lot of Korean industries will be a whole lot richer than they are now.

    At which point, MH’s clique of apologists will no doubt argue that that would have happened anyway. They always have a glib, ready-made explanation for everything.

    DLB

  • cm

    #6 – you may have to wait 3 to 5 years for a complete accurate assessment. Some of the deals don’t get implemented right away, but they go in phases lasting up to lengthy periods.

  • http://www.xanga.com/wangkon936 WangKon936

    I don’t understand how any expats would complain about the FTA. Cheaper cheese, booze and other food stuffs from places they are familiar with.

    I don’t understand how most Koreans complain about the FTA. Bigger markets for their primary employers (i.e. the Chaebol) and cheaper food. With all the bitching Koreans have been doing about inflation, FTAs are the best short term fix.

    It’s a highly vocal minority that’s complaining. Farmers. However, even if the opposition party gets into power, with the lowering of prices that the FTA contributes to, the rank and file population may not want the FTAs to be overturned (not that the opposition party has any ability to do so even if they regain control of the Blue House).

    Disagree w/DLB, but hey… I won in the end so I don’t have to defend my position anymore. That’s the perk of the winner.

    I agree w/cm. Time will tell and be the ultimate measure of success. I simply see it as in a few years I shall gloat again… :)

  • cm

    The only major stuff that the US sells Korea that I see on the surface are defense, auto, and agriculture. Most of the American consumer stuff are produced in China which negates the FTA advantage. The main US complaint, the Korean auto import market should see a good price drop. US auto should gain, if Honda and Toyota starts shipping their US made cars. Ford has already dropped over $5000 on Ford Taurus, and big price cuts across their lineup.

  • DLBarch

    Well, that didn’t take long, and is not surprising at all:

    http://english.chosun.com/site/data/html_dir/2012/03/15/2012031501160.html

    Coulda predicted this two years ago. Oh, wait….

    DLB