Thank you, Chair. On behalf of the United States, I welcome this opportunity to participate in the sixth trade policy review of Korea. I would like to welcome the large delegation of our friends from Korea, led by Ambassador LEE Sihyung. We would also like to thank the Secretariat for its very excellent report. Finally, we thank the discussant, Ambassador Joakim Reiter (Sweden) for his insightful remarks.
The United States places extraordinary value on its relationship with Korea. The time since Korea’s last trade policy review has been quite consequential for both of us. First and foremost, we opened a new chapter in our trade relationship with the March 15 entry into force of our bilateral free trade agreement. As most of you know, this was a long and challenging process from when the negotiations began in 2006 to entry into force. And make no mistake – this is a major agreement – our bilateral trade relationship including services exceeds $120 billion. Despite the high stakes, KORUS passed with strong bipartisan support in the United States, reaffirming the strong U.S. support for open trade and our ability and readiness to reach comprehensive agreements with major economic partners.
The Korean government also had to contend with domestic challenges along the way, and Korea deserves our admiration for its determination to take the political risks inherent in pursuing and concluding an agreement that opens markets across the whole economy and involves substantial domestic reforms. Together, we have concluded an agreement we believe serves as a global model for high quality free trade agreements. I also want to express the sincere thanks and gratitude of the United States to Korea’s new Ambassador CHOI Seok-young for his untiring efforts to reach this agreement. He was absolutely critical to achieving success in this endeavor, and is truly one of Korea’s ablest negotiators. Thank you, Ambassador Choi, for your personal contributions to this great achievement. As Korea’s report notes, the KORUS FTA is already increasing bilateral trade between us, with investment also showing an increase compared to last year. We expect the FTA to have far-reaching, job-supporting economic benefits to both countries, from increased exports to increased competitiveness.
Beyond the KORUS FTA, U.S.-Korean cooperation has been growing in other aspects of our trade relationship as well. We are close partners in APEC, where Korea has contributed significantly to APEC’s work on regional economic integration, green growth, and regulatory convergence. We have worked together to strengthen international protection and enforcement of intellectual property rights through ACTA. And here in the WTO, we would in particular point out Korea’s support for services liberalization as reflected by its longstanding membership in the Really Good Friends of Services group and current participation in discussions concerning a services plurilateral initiative.
Since the last review of Korea in 2008, the world has seen significant changes, with the global financial crisis beginning in late 2008. As the reports by the Secretariat and Korea make clear, amidst these sobering changes, Korea has taken aggressive steps to counter the global trend and become one of the first countries to follow the path to economic recovery. In addition to effective fiscal and monetary policies, the Korean government has also continued market-opening policies while at the same time proceeding with domestic regulatory reform measures.
And as a further sign of its commitment to trade liberalization, Korea has continued down an ambitious path of concluding WTO-plus free trade agreements. Since the last review, in addition to the United States, Korea has also entered into free trade agreements with the ASEAN, India, the European Union, and Peru, and as noted in the reports, is currently in negotiations with several additional countries.
We would also like to highlight the progress noted in the WTO reports regarding customs procedures. This is an area where Korea is considered to be a leader in international best practices, and Korea has further streamlined and modernized its customs procedures since the last review. The United States also welcomes the progress Korea has made in improving competition laws and regulations, improving corporate governance, transparency, and financial sector restructuring, all of which were noted in the Secretariat’s report.
Given the clear determination of the Korean government to further open its trade and investment regimes, the United States urges Korea to make additional progress in reducing burdensome, sometimes duplicative and scientifically questionable regulations and procedures related to technical regulations, standards, and conformity assessment. This is an area where Korea’s regime continues to sometimes present unique difficulties for companies trying to export into its market.
Furthermore, while we respect Korea’s right to adopt sanitary and phytosanitary measures necessary for the protection of human, animal and plant life or health, we look to Korea to ensure that its SPS measures are based on science and consistent with the WTO Agreement on the Application of Sanitary and Phytosanitary Measures.
We note that Korea’s ratio of inward foreign direct investment to GDP is among the lowest in OECD comparisons. We recognize Korea’s efforts to address this, and look forward to possible improvements through our FTA. Nevertheless, we encourage our Korean partners to continue down the path of easing burdensome regulations and improving the business environment.
While we welcome the rise in the import share of the Korean passenger vehicle market, nevertheless, there remains a large imbalance in Korea’s automotive trade. We urge Korea to continue to adopt policies that level the playing field in this sector.
Korea is a strong partner and ally of the United States, on trade matters and beyond. The ongoing efforts of the Korean government to further open its economy will increase the global competitiveness of the Korean economy for the benefit of its own people, while forging stronger links with its trading partners. We welcome the progress Korea has made since its last review and pledge to work closely with Korea in the WTO, in other regional forums like APEC, and, of course, bilaterally, to pursue our common goal of a free and open global trading system.
I would like to thank the Korean team for their answers to our questions, which we will examine closely.
Thank you very much Mr. Chairman, and I wish the best to Korea as it continues its Trade Policy Review.