South Korea will gradually reduce the tariffs on American cars and trucks and finally eliminate all of them within three years under the tariff-cut scheme of the bilateral free trade agreement (FTA) it signed with the U.S. on June 29. The FTA will take effect within 90 days after it`s approved by the U.S. Congress.

The U.S.-Korea FTA, which is claimed to be the largest FTA signed by the U.S. in the 15 years since the North America Free Trade Agreement (NAFTA) came into force in 1993, is widely considered a positive move to boost transpacific trade. South Korea is now the seventh largest trading partner of the U.S. Their bilateral trade, which now tops US$80 billion annually, will be further boosted under the FTA, which will scrap tariffs on 95% of the goods shipped between the two countries.

The U.S. suffers a chronic trade deficit in car and auto parts trade with South Korea, and expects improvement under the free trade agreement, which was finally signed after 10 months of tough negotiations. Some U.S. Senators, however, are much more concerned about the non-tariff barriers, saying that they are the major reason behind the trade imbalance and it won`t be effectively resolved under the free trade agreement.

CENS, September 13, 2007