Benefits for Georgia from the U.S.- Korea Free Trade Agreement Georgia & Global Trade Georgia is the 12 th largest exporter among all U.S. States with global exports of $34.7 billion (2011) Exports of manufactured goods account for over 4.2% of Georgias total private-sector jobs 88% of all Georgia exporters are SMEs Georgia & Korea Trade Georgia exports to Korea were $907 million in 2011 Korea is Georgias 10th largest international market
Overall Benefits of the Korea FTA for Georgia The U.S.-Korea FTA, which began on March 15, 2012, will eliminate 95% of all Korean consumer and industrial products duties within 3 years, including such leading Georgia exports to Korea as computers and electronics, machinery, and transportation equipment. The U.S. International Trade Commission estimated that U.S. exports to Korea could expand by as much as 40% over the next few years under the U.S.-Korea FTA.
Sector Benefits of the Korea FTA for Georgia Transportation Equipment Manufacturing – USD 338 million (2011) – Georgias largest leading exports include aircraft, fishing vessels, locomotives and other transportation manufactures. Duties on most transportation equipment products will be eliminated immediately, including duties on 87 percent of aircraft and related parts. Machinery Manufactures – USD 94 million (2011) - Georgias second manufactured exports, such as water filtering, purifying equipment, refrigeration compressors, etc., faces an 8 percent tariff rate; however, these tariffs will be phased out immediately.
Chemical Manufactures – USD 84 million (2011) – Georgias third leading manufactured exports to Korea that includes pharmaceuticals, cosmetics, fertilizers, agro-chemicals, etc., have tariffs that range from 6 to 50 percent. Most of these chemical exports will receive duty-free treatment immediately, with the remaining tariffs phased out within 10 years, under the U.S.-Korea FTA. Computers and Electronic Products – USD 43 million (2011) – Georgias sixth largest exports to Korea faces 8 percent tariffs, based on their specific HS code. Under the KORUS FTA all of these tariff rates will be phased out immediately.
Best Market Prospects for Georgia under the Free Trade Agreement Among Georgias top global exports, the following products will have significant benefits under the U.S.-Korea FTA. Georgia exported over $1 billion in gas turbines worldwide in 2011. The 3-8% tariff will be eliminated immediately upon implementation of the U.S.-Korea FTA. Georgia exported $1.8 billion in motor-cars & vehicles for transporting persons worldwide in 2011. The 8% tariff will be eliminated immediately upon implementation of the U.S.-Korea FTA. Georgia exported $1.1 billion in agricultural products worldwide in 2011. Tariffs on U.S. agricultural products like those produced in Georgia such as poultry, cotton, and peanuts, will be phased out upon implementation of the U.S.- Korea FTA.
Koreas Golden Age … Koreas Golden Age … 1988: Summer Olympics 2002: World Cup 2010: G20 Seoul Summit 2012: Nuclear Security Summit, 2012: Yeosu World Expo 2014: Asian Games 2018: Pyeongchang Winter Olympics Mr. BAN Ki-moon: Secretary-General of the United Nations Mr. Jim KIM: President-elect of the World Bank Mr. Sung KIM: U.S. Ambassador to Korea …(oh …and by the way)…COSTCO stores in Korea have some of the highest revenues of any COSTCO stores -- worldwide.
How big is Korea? Korea, where 70 percent of the topography consists of mountains, is about the size of Indiana …but with 50 million people.
Korea then and now Korea has maintained a remarkable average annual economic growth rate of 7% (<>) over <>35 years. Today it is the worlds 10 th largest economy, despite being totally resource dependent, being totally dependent on trade (80%), and recovering from a major civil war over 50 years ago.
Korea is a Global Player 8 th in the world in trade (World Factbook) 1 st in Internet usage (ITU) 1 st in shipbuilding (Economy Watch) 3 rd in Semiconductors 3 rd in mobile phone penetration 3 rd in Production of LCD monitors 5 th largest Auto producer (Economy Watch) 10 th in power generation (US EIA) 15 th global GDP (IMF) …oh…and by the way… is world-renown for TV & movie dramas, music and the K-Pop or Korean Wave…
Korea as a Trading Partner Fast-growing market with 49 million consumer with a per capita GDP of $31,754 (2011) Worlds 12 th largest economy: $1.6 trillion GDP (2011) U.S. 7 th largest trading partner and 7 th largest export market U.S. goods exports to Korea were $43.5 billion in 2011 U.S. services exports to Korea were $17.0 billion in 2011 Korean exports (goods and services) as % of GDP: 52% U.S. exports (goods and services) as % of GDP: 13.8% Korea ranks 8 th out of 183 economies in 2012: Ease of Doing Business index by the World Bank
Koreas Economy GDP: US$ 1,014 trillion (2010) Services 67% Industry 31% Agriculture 3% Trade: US$1,081 billion (> 100% of GDP) Exports in 2011: $557 billion Imports in 2011: $524 billion US 8 th largest export market Over 80% of Koreas economy is trade-related
Important, and true Korea is clean, safe ( you are captured on a CCTV screen ev. 12 secs in Seoul !), and well-organized Intellectual Property protection is pretty good Legal recourse is expensive, much more predictable than in many nations, and improving Korea is 43 rd in Transparency Internationals Corruption Perceptions Index Korean industry is skilled at tweaking improvements to technology
Industrial Concentration is High Korea grew on the backs of a few favored firms. Today they dominate the economy. Several Chaebol are highly innovative and willing to take very large risks 30 Chaebol are responsible for more than 50% of Koreas GDP. The economic power of the largest players, who dominate multiple industries, is astounding
Korea is strategically located Northeast Asia accounts for 21% of global GDP, 24% of global population and 15% of global trade. Korea is strategically located between the giant economies of China and Japan, which are the worlds largest single markets and the worlds largest economies.
Korea is strategically located 51 cities with populations exceeding 1 million are located within a 3.5-hour flight of Seoul. 700 million people live within a 1,200 km radius of Seoul (more than the populations of the United States and Europe combined). Trade volume with Japan, China and United States amounts to over $220 billion.
Transportation Marine transportation - Cargo imports, exports and transshipments: 11,840,000 TEU (No. 5 in the world) Land transportation - 90% of domestic transportation is handled by roads and railways. - 5 th high speed rail network in the world.
On-line Shopping Websites 30,064 on-line shopping websites in Korea. Over 4,500 B2C Korean cyber shopping malls. In 2011, on-line consumers spent nearly USD 28 billion. E-Commerce transactions in 2011 exceeded USD 700 billion. Korea is connected. In 2009, 96% of Korean households had internet access. (79% - Germany, 69% - USA, and 67% - Japan) Power bloggers are…popular and powerful…
Top 10 US Exports to Korea Machinery & Computers16% Electrical Machinery15% Optical, Medical & Laboratory7% Aircraft7% Cereals6% Organic Chemicals6% Fuel & Hydrocarbons4% Iron & Steel3% Plastics3% Vehicles2% 68% Source: US Customs
Koreas Best Prospects 2012 Aerospace Industry Cosmetics Defense Industry Equipment Education Services Energy: New and Renewable (NRE) Entertainment and Media Franchising Medical Equipment and Devices Pollution Control Equipment Semiconductors Specialty Chemicals Travel and Tourism Source: Commercial Service - Korea
Protecting Your Valuable Intellectual Property (IP) in Korea: In Korea, registration of patents and trademarks is on a first-to-file basis. IP must be registered and enforced in Korea through Korean laws. KIPO website: http://www.kipo.go.kr/kpo/user.tdf?a=user.eng.main.Bo ardApp http://www.kipo.go.kr/kpo/user.tdf?a=user.eng.main.Bo ardApp
KORUS FTA A Well-Timed Opportunity Korea and the U.S. have worked together closely for more than half a century. The KORUS FTA is the most important trade agreement for U.S. companies since NAFTA. Is very unlike NAFTA in many ways. This FTA is described as the gold standard -- and was six years in the making.
Average Korean Tariff under KORUS FTA Source: Appendix 2-B, KORUS FTA, http://www.ustr.gov/trade-agreements/free-trade-agreements/korus-fta/final-text Tariffs
Tariff Reduction – Staging Categories Category H.S. Codes ADay 1 at 0%7,521 B2 years to reach 0% 6 C3 years 749 D5 years 503 E6 years 2 F7 years 38 G10 years 718 H15 years 88 I10 years, tariff reduction starts 24 slowly then accelerates J12 years, no reduction first 9 years 1 Kalready at 0% before KORUS1,625 M N Q U YSpecial Rules for Agricultural Products 128
KORUS Overview and Key Provisions Over 95% of trade in consumer and industrial products duty- free within 5 years Tariff and non-tariff barrier reductions for agricultural products Increased access for U.S. autos, including unprecedented provisions to address non-tariff barriers in Korea Further market access for U.S. service providers State-of-the-art protections for IP Expanded access to Korean government procurement contracts New protections for U.S. investors Investor-State Dispute Settlement mechanism to help investors address violations of the KORUS investment chapter
How KORUS benefits U.S. businesses KORUS Levels the Playing Field Koreas applied tariffs on U.S. goods average 6.2 percent, while U.S. tariffs on Korean goods average 2.8 percent. Small and Medium Size Enterprises and KORUS The transparency provisions help small and medium size companies that may not have the resources to navigate customs and regulatory red tape Investors Establishes a secure and predictable legal framework for U.S. investors in Korea Service Providers Improved access for U.S. service providers, including telecom, express delivery, legal, financial, and many others
Whats My Tariff? FTA Tariff tool: http://export.gov/FTA/FTATariffTool/ Detailed Background Information: http://export.gov/FTA/korea/index.asp USTR website: http://www.ustr.gov/uskoreaFTA ITA website: http://export.gov/FTA/korea/ US Customs website: http://www.cbp.gov/xp/cgov/trade/trade_programs/inte rnational_agreements/free_trade/
Do I need a Certificate of Origin? You must prove your product qualifies for a lower tariff under KORUS. But, you do not need to get an official document from a government office. (unlike NAFTA) The burden lies with the importer of record. Written or electronic certification by the manufacturer, exporter or importer. If requested by Customs, must provide proof.
Self-Certification These data elements are part of your self-certification. Name of Certifying Person Importer Exporter Producer Description of Good Tariff Classification Information Demonstrating that a Good is Originating Period Certification Covers (if a blanket certification) Certifying Statement Authorized Signature & Date There is no prescribed format.
Rules of Origin Transformation rules: inputs are substantially different from the final product. Specific rules by HS code under KORUS FTA. For example: Leather and metal parts transformed into a handbag Raw cinnamon transformed into packaged, ground cinnamon Wood, plastic and metal parts transformed into furniture Electronic parts transformed into a printed circuit board
Rules of Origin Regional Value Content rules: the proportion of U.S. and Korean (Regional) content exceeds x%, or the proportion of non-Regional (KR) content is less than y% Specific rules by HS code under KORUS FTA For example: Imported furniture components (not from Korea) transformed into finished furniture; at least 35% Regional, or no more than 45% from third countries A printed circuit board (not from Korea) transformed into a new printed circuit board; at least 30% Regional, or no more than 35% from third countries
Rules of Origin A good must be more than a product of Korea, it must meet a preference rule of origin The FTA rules of origin lay out the various methods that a good can qualify for preference, or originate An imported good must be originating to receive preferential tariff treatment Preferential tariff treatment is not necessarily duty- free, might be a reduced rate of duty while tariffs are being phased out U.S.-Korea FTA qualifying goods eligible for KR rate of duty found in the Special column of the HTS Chapters 1 to 97 U.S. Customs and Border Protection
Preference Criteria Wholly Obtained Tariff Shift Regional Value Content (RVC) achieved in three ways: Build Up Build Down Net Cost Exclusively from Originating Materials U.S. Customs and Border Protection
Doing Business in Korea: 2012 Country Commercial Guide for U.S. Companies Chapter 1 : Doing Business In Korea Chapter 2: Political and Economic Environment Chapter 3: Selling U.S. Products and Services Chapter 4: Leading Sectors for U.S. Export and Investment Chapter 5: Trade Regulations, Customs and Standards Chapter 6: Investment Climate Chapter 7: Trade and Project Financing Chapter 8: Business Travel Chapter 9: Contacts, Market Research and Trade Events Consult: http://www.buyusainfo.net/docs/x_6114956.pdf or www.export.gov/southkorea (see icon for CCG).http://www.buyusainfo.net/docs/x_6114956.pdfwww.export.gov/southkorea Source: USDOC/Commercial Service
We look forward to working with you in this mature, …dynamic, …fast-moving, …ever- changing …(… but not for everyone!!! ) market … Visit with International Trade Managers of the GA Dept. of Econ. Dev., Office of Global Commerce: International Operations: International Trade and Mr. Peter Underwood and Ms. Shin Hee-jung, State of GA Reps in Korea, www.ircltd.com www.ircltd.com Visit with International Specialists in the U.S. Export Assistance Centers in GA: www.export.gov/usoffices/index.asp who will assist you in contacting us. www.export.gov/usoffices/index.asp Jim Sullivanjim.firstname.lastname@example.org - Senior Commercial Officerjim.email@example.com Erik Hunterik.firstname.lastname@example.org - Deputy Senior Commercial Officererik.email@example.com Mark OGrady firstname.lastname@example.org – Commercial Officer (sector specific)email@example.com Maria Galindo firstname.lastname@example.org – Commercial Officer (sector specific)email@example.com Catherine Spillmancatherine.firstname.lastname@example.org – Commercial Officer (sector specific)email@example.com –
Gamsamhapnida and Good luck! (Haeng-un ul biluyo)