Benefits Of The U.S.-South Korea Trade Agreement To U.S. Small And Medium Businesses
Expanding exports by America’s small- and medium-sized businesses in order to support well-paying jobs at home is a key priority. The U.S. –South Korea Trade Agreement (KORUS) opens significant new export opportunities for U.S. small and medium enterprises (SMEs). South Korea is the 8th largest market worldwide for U.S. small business goods exports, based on value in 2009. Removing tariff and non-tariff barriers to the sale of American-made goods and services in the South Korean market, and strengthening protection and enforcement of intellectual property rights in South Korea, will help U.S. small businesses expand their exports to South Korean buyers.
Thousands of small businesses across the United States export goods to South Korea
Almost 18,000 U.S. small and medium companies exported to South Korea in 2009. SMEs accounted for 89 percent of all U.S. exporters into the South Korea market. In 2009, U.S. small- and medium-sized enterprises exported $8.4 billion in merchandise to South Korea, representing 32 percent of total U.S. merchandise exports to South Korea.
The KORUS agreement will tackle the trade barriers that most affect small businesses seeking to export to this important Asia Pacific market.
Tariff reduction and elimination: U.S. small businesses will benefit from reduction and elimination of tariffs on U.S. exports under the KORUS. Tariff cuts alone in the U.S.-South Korea trade agreement are estimated to increase exports of American goods by $10 billion to $11 billion, according to the U.S. International Trade Commission. SME exporters accounted for 60 percent or more of all exporters to South Korea in every goods sector (21 sectors). Under the agreement, U.S. exports in key sectors for small business such as electrical/electronic goods, chemicals, and scientific equipment will gain duty-free access to the South Korean market. The Agreement eliminates tariffs on over 95 percent of U.S. exports to South Korea of industrial and consumer goods within five years.
New opportunities for service providers: The U.S.-South Korea trade agreement will also open South Korea’s $580 billion services market to American companies, including in areas where U.S. small businesses are particularly competitive such as computer systems design, software publishing, and other information and communications technology services. The agreement targets services barriers that are especially difficult for small businesses, such as requirements for staffing an office in the foreign market before conducting trade.
Customs Administration: The KORUS Agreement contains provisions to speed and simplify customs procedures and paperwork, meaning less costs and red tape, which can disproportionately impact small exporters. These commitments include obligations to adopt or maintain simplified customs procedures to facilitate the immediate release of goods, including expedited procedures for express shipments; provide for electronic submission of customs information before a good’s arrival, and allow U.S. exporters to obtain binding advance rulings on matters such as tariff classification, and whether a good qualifies for preferential tariff treatment.
Government Procurement: The U.S.-South Korea agreement expands U.S. firms’ access to the $100 billion South Korean government procurement market and gives U.S. suppliers rights to bid on contracts to supply more South Korean government ministries, agencies and other central government entities than are covered under the WTO Government Procurement Agreement (GPA). It will also create new opportunities by reducing the threshold for goods and services to $100,000 for U.S. exporters, including small exporters as well as small suppliers to larger firms. It will also encourage South Korea to adopt the latest and best emerging practices in government procurement, such as the use of electronic procurement tools, which will help U.S. small businesses – and all U.S. firms – more easily participate in government procurement in South Korea.
Transparency: Non-transparent foreign regulations can be a costly barrier for U.S. small businesses seeking to export their products. The KORUS agreement includes strong transparency obligations, with commitments that the national government will to the extent possible publish proposed regulations in advance, allow a reasonable opportunity to comment, address significant comments received, publish final regulations in an official journal of national circulation, and provide sufficient time between publication and implementation of the final regulation to allow stakeholders to adjust.
Intellectual Property Rights: Strong intellectual property rights protection is an important factor especially for small businesses seeking entry into new foreign markets. The KORUS agreement has state-of-the- art provisions to protect and enforce intellectual property rights, including copyrights, trademarks and patent, for innovative and creative U.S. companies. As an example of benefits that can be especially helpful for small businesses, it provides for an on-line system for the registration and maintenance of trademarks, as well as a searchable database for trademark applications and registrations, and requires transparent procedures for the registration of trademarks.