Page 1 Bureau of Economic, Energy and Business AffairsU.S. Department of State Bureau of Economic, Energy and Business Affairs Promoting Free Trade in a Challenging Time U.S. Department of State Erik J. Magdanz East Asia Trade Policy Bureau of Economic, Energy, and Business Affairs U.S. Department of State

Page 2 Bureau of Economic, Energy and Business AffairsU.S. Department of State Benefits of Free Trade Agreements Opening vital new export markets for American goods and services and level the playing field. Strengthening economic opportunity, prosperity, and security. Supporting democracy, good governance and rule of law. Promoting strong labor and environment standards.

U.S. Export Growth: (in billions)

Page 4 Bureau of Economic, Energy and Business AffairsU.S. Department of State No Correlation Between Imports & Unemployment

Page 5 Bureau of Economic, Energy and Business AffairsU.S. Department of State Michigan Exports by Country

Page 6 Bureau of Economic, Energy and Business AffairsU.S. Department of State Michigan Exports by Product

Page 7 Bureau of Economic, Energy and Business AffairsU.S. Department of State U.S. Free Trade Agreements since 1994 NAFTA – U.S./Canada/Mexico (1994) U.S. – Jordan (2001) U.S. – Australia (2001) U.S. – Chile (2001) U.S. – Singapore (2004) U.S. – Bahrain (2006) U.S. – Morocco (2006) U.S. – Oman (2006) U.S. – Peru (2007) Pending: FTAs with Colombia / Panama / South Korea

Page 8 Bureau of Economic, Energy and Business AffairsU.S. Department of State U.S. FTA Partners in the Global Economy FTA Countries: 7.5% Non-FTA Countries: 92.5% To FTA Countries: 42.6% To Non-FTA Countries: 57.4% Percent of World GDP, 2006 Percent of U.S. Exports, 2006

Page 9 Bureau of Economic, Energy and Business AffairsU.S. Department of State U.S. Trade with South Korea (in millions) Imports from Korea U.S. Exports to Korea $35 billion $48 billion

Page 10 Bureau of Economic, Energy and Business AffairsU.S. Department of State The U.S.-Korea FTA (KORUS) Economic Opportunities: –Over the past 10 years, Koreas average annual growth rate for trade has been 12.5%. –U.S. exports to Korea grew to $35 billion in 2007, a 53% increase over KORUS FTA Eliminates Tariffs and Increases Access: –Nearly 95% of trade on consumer/industrial products duty-free within 3 years. Koreas current applied tariffs on industrial goods average 6.2 percent while the U.S. is at 2.8 percent. –More than two-thirds ($1.9 billion) of U.S. farm exports duty-free immediately. –Increased access for U.S. autos Geopolitical: Korea is a vital regional ally. The FTA would underscore the United States commitment of promoting strong economic growth in the region.

Page 11 Bureau of Economic, Energy and Business AffairsU.S. Department of State The KORUS FTA and Autos Eliminates Koreas 8% tariff on U.S. vehicles, reducing price of the average U.S. car in Korea by $4,000 to $7,500. Eliminates discriminatory aspects of Korean auto taxes on the basis of engine size that disproportionately affect U.S. autos. Ensures Korea will not adopt technical regulations that create unnecessary barriers to trade and will harmonize standards. Creates an expedited dispute settlement mechanism, under which the U.S. tariffs on Korean cars – about $220 million in 2006 – will snap back if Korea violates any FTA provision. In response to U.S. automakers, addresses several specific non-tariff barriers including vehicle emissions and safety standards.

Page 12 Bureau of Economic, Energy and Business AffairsU.S. Department of State Auto Imports See Significant Growth in Korea Other Auto-Related Information: GM-Daewoo currently has 14% of the domestic auto market in Korea (approx. 140,000 autos/year). Hyundai and Kia Motors investing $2 billion to build auto plants in Alabama and Georgia. Each plant to employ 2,000 workers and produce 300,000 cars/year.

Page 13 Bureau of Economic, Energy and Business AffairsU.S. Department of State Trans-Pacific Economic Partnership Singapore Brunei New Zealand Chile United States TransPac Negotiations to Launch in early 2009

Page 14 Bureau of Economic, Energy and Business AffairsU.S. Department of State U.S. Trade with China

(in millions) Imports from China U.S. Exports to China $330* $78* $321 $65 $55 $288 -$233 -$256 -$253* Growing Exports Positively Impacting Trade Deficit * estimated $243 $41 $197 $34 -$204 -$163 (in billions)

Page 16 Bureau of Economic, Energy and Business AffairsU.S. Department of State South Koreas KOSPI Stock Index

Page 17 Bureau of Economic, Energy and Business AffairsU.S. Department of State Chinas Shanghai Composite Index

Page 18 Bureau of Economic, Energy and Business AffairsU.S. Department of State Bureau of Economic, Energy and Business Affairs Promoting Free Trade in a Challenging Time U.S. Department of State Erik J. Magdanz East Asia Trade Policy Bureau of Economic, Energy, and Business Affairs U.S. Department of State