|Free Trade With South Korea?|
|Key Words||Free Trade, Protectionism, and Antidumping|
|News Story||Leaning on President Bush's special trade negotiating powers, known as "fast track" authority, the United States has resumed free-trade talks with South Korea. This "fast track" authority allows the president to negotiate a deal and present the legislation to congress for acceptance or rejection and no amendments may be made.
"We have made important progress to date, but we still have a lot of work to do," said Wendy Cutler, an assistant trade representative and the lead negotiator for the United States. The U.S. wants greater access to the Korean market for American cars, rice and drugs. South Korea is asking the U.S. to change antidumping rules applied to South Korean Steel, cars, computer chips and textiles. Seoul also wants goods produced by South Korean factories located in North Korea to be included in the agreement.
Antidumping laws are passed to prevent discriminatory pricing. In other words "dumping" refers to a country that sells products in different markets at different prices without a basis in the cost of production. The U.S. has passed laws against such dumping to protect domestic producers from unfair competition. South Korea says their products have been unfairly targeted.
On the other side of the table, South Korea has placed limits on American exports of cars and medical products that keep U.S. producers from selling their products in South Korea. Such protectionist actions usually are met with retaliation in the form of tariffs and other trade measures.
It would seem that there is certainly room for negotiation between the two countries. A successful deal would be beneficial to exporters in both countries. According to the United States International Trade Commission, U.S. firms could expect an increase in exports to South Korea of about $19 billion while South Korean firms could expect to deliver an additional $10 billion in goods to the U.S.
|Source||Choe sang-Hun, "With New Urgency, U.S. and South Korea Seek Free-Trade Deal", The New York Times Online, January 16, 2007.|
|Instructor Discussion Notes|| Discussion
These notes are restricted to qualified instructors only. Register for free!
Return to the International Trade Index
©1998-2006 South-Western. All Rights Reserved webmaster | DISCLAIMER