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How big is Korea? Korea is roughly the size of Indiana With a GDP equal to that of Indiana, Ohio and Michigan Koreas exports equal 2011 exports from: Indiana.

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Presentation on theme: "How big is Korea? Korea is roughly the size of Indiana With a GDP equal to that of Indiana, Ohio and Michigan Koreas exports equal 2011 exports from: Indiana."— Presentation transcript:

1 How big is Korea? Korea is roughly the size of Indiana With a GDP equal to that of Indiana, Ohio and Michigan Koreas exports equal 2011 exports from: Indiana Ohio Michigan Illinois Pennsylvania Tennessee New York New Jersey and California.

2 Labor Productivity High School Graduation University Degrees Hours Worked GDP per Hour Worked USD Compensa- tion USD/hour Labor Productivity Growth Rate Korea98 %21 %2,193$ 27.20$ 15.166.4 % Mexico39 %15 %1,866$ 19.80$ 6.711.8 % USA87 %40 %1,778$ 59.00$ 33.213.0 % Japan41 %1,773$ 39.40$ 20.683.2 % Germany85 %25 %1,419$ 53.60$ 28.261.4 % Source: OECD

3 Korea is hungry for technology Following others is the fastest route to development Korea today is approaching the frontiers of technology Innovation and invention are difficult – for everyone Korea is investing in R&D as never before A growing portion of Koreas government budget goes to R&D Korea is determined to get the technology it wants Your Intellectual Property is very valuable

4 Important, and true Korea is clean, safe, 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

5 A Zero-Sum tradition If you are benefiting, then I am losing Negotiations are always hard-fought. The important point to remember is that negotiations in Korea are never over. Under Korean law, a contract is not an iron-clad commitment. It cannot be broken because it is flexible. Win-win thinking is not the norm. Some observers have commented: Every game is an away game.

6 KORUS FTA: A Well-Timed Opportunity Korea and the U.S. have worked together closely for more than half a century Korea has rapidly become an important player on the world stage – economically, politically, and socially Korean consumers want to buy the best, and their companies make highly competitive partners The KORUS FTA is the most important trade agreement for U.S. companies since NAFTA

7 7 III. 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 intellectual property 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

8 8 Unique Provisions of the Agreement Autos Allows U.S. automakers that exported fewer than 25,000 motor vehicles to Korea in the previous year to export vehicles that comply with U.S. safety standards rather than the Korean standard Adjustments to general auto and truck tariffs give U.S. auto companies and American workers the opportunity to increase sales in Korea before U.S. tariffs on Korean autos come down Korea immediately reduced its electric car tariffs from 8 percent to 4 percent and will phase out its tariffs by the fifth year A special autos safeguard allows the United States to address auto imports that are causing, or threatening to cause, injury to the U.S. auto industry Pharmaceuticals/Medical Devices Requires fair, non-discriminatory procedures in reimbursement and pricing Establishment of a Medicines and Medical Devices Committee

9 KORUS: Non-Tariff Barriers KORUS Non-Tariff Barriers Provisions Strong provisions on how Korea will develop regulations impacting U.S. exports Benefits to American manufacturers including greater input into the development of – standards – technical regulations – conformity assessment procedures Increased transparency and opportunity for public input Beneficial to small and medium-sized enterprises with limited resources 9

10 10 IV. Benefits of KORUS to U.S. Businesses KORUS Levels the Playing Field Koreas applied tariffs on industrial 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

11 11 V. KORUS Entry-Into-Force Before entry-into-force: Koreas average duty was almost 13 percent KORUS entry-into-force: March 15, 2012 Day 1 (March 15): U.S. exports face no tariffs in Korea on 80 percent of all products. With a few exceptions, within 2 and 15 years, all other remaining products will become duty-free By year 10: U.S. exports will face no tariffs in Korea on almost 99 percent of all products

12 Certificate of Origin Requirements You must prove that your product qualifies for reduced tariff benefits under KORUS Although the Korea Customs Service has an optional certificate of origin form, you are not required under KORUS to use any particular format Only requirement: written or electronic certification by the importer, exporter, or producer 12

13 Certificate of Origin Contents KORUS Chapter 6, Section B, Article 6.15: Each Party shall provide that a certification need not be made in a prescribed format, provided that the certification is in written or electronic form, including but not limited to the following elements 1.Name and contact information of certifying person 2.Importer of good 3.Exporter of good 4.Producer/manufacturer of good 5.Harmonized System classification and description of good 6.Proof of U.S. origin: a) Manufacturers written or electronic certification b) Manufacturer or exporters knowledge 7.Date of certification 8.Period covered by certification 13

14 Rules of Origin Transformation rules: inputs are substantially different from the final product – Ex: Leather and metal parts transformed into a handbag Regional value content: the proportion of U.S. and Korean (regional) content exceeds x%, or the proportion of non-regional content is less than y% – Ex: Imported furniture components (not from Korea) transformed into finished furniture; at least 35% regional or no more than 45% from third countries Specific rules by HS code under KORUS 14

15 How to See if Your Product Benefits Get Help from an Expert – Call the Department of Commerce Trade Information Center (TIC) 800-USA-TRADE (800-872-8723) The TIC can help with: U.S.-Korea Trade Agreement rules of origin Classification of exports to Korea Identifying applicable tariff rates Making claims for preferential treatment 15

16 VI. Helpful Resources 16

17 Export.Gov – KORUS 17

18 Export.Gov – FTA Tariff Tool 18

19 3 Features of the FTA Tariff Tool The FTA Tariff Tool combines complex tariff and trade data into a simple and easy-to-search free public interface. The Tool has three functions: 1.Users can see the current tariff and future tariffs applied to their products, as well as when those products will become duty-free 2.Users can analyze how key sectors are treated under an agreement by combining sector and product groups, trade data, and the tariff elimination schedules 3.Users can compare how particular sectors are treated across various FTAs 19

20 Whats My Tariff? 20

21 Thank you Joshua Pierce International Trade Specialist U.S. Department of Commerce 1401 Constitution Ave., NW Washington, DC 20230 (202) 482-0961 21

22 NAM in Cooperation with the Commerce Department Can Assist in Exporting to Korea. Help you to identify customers, distributors or agents Provide trade counseling and how to comply with requirements Access to U.S. Department of Commerces Services Get started with one phone call to NAM: 202-637-3407

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