BumpedSeptember 1, 2011
Korea-U.S. Free Trade Agreement seen as rich opportunity for P.R.
New pact will further open $1 trillion market for local businesses, build on $62.6 million trade growth in 2010
South Korea's $1 trillion economy might soon be ripe for business with U.S.-based and local companies when the long-awaited Korea-U.S. Free Trade Agreement (Korus FTA), currently pending congressional approval, is signed.
The U.S. International Trade Commission (ITC) estimated tariff cuts alone in the Korus FTA will increase exports of U.S. goods by $10 billion to $11 billion. Puerto Rico, as a U.S. territory, stands to benefit greatly in all areas of the negotiated agreement. Moreover, with the passage of the Korus FTA, Puerto Rico could become a key catalyst for Korea-U.S. trade expansion in the Caribbean, Central America and Latin America.
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"U.S. trade with Korea via Puerto Rico for 2010 totaled $75 million in exports and $162 million in imports," said Robert Álvarez, founder & executive director of the World Affairs Council of Puerto Rico. "The trade increase from 2009 to 2010 was 62.6% [from $99 million to $162 million]. Many global Korean companies already have a strong presence in Puerto Rico, while different sectors in Puerto Rico are aggressively seeking a presence in Asia via Korea."
The ITC estimates U.S. economic output will grow more from the Korus FTA than from the past nine U.S. trade agreements combined, something that could amount to an economic bonanza for local businesses. South Korea, already the U.S.' eighth-largest trading partner, saw its economy grow by 5.8% in the second quarter of 2010, and the International Monetary Fund expects it to grow by another 6.1% in 2011, a rate significantly higher than current U.S. growth.
South Korea continues to have one of the fastest-growing economies among members of the Parisbased Organization for Economic Cooperation & Development. South Korea's growth suggests it will remain a strong trading partner.
The first monthly trade statistics for 2011, reported by the U.S. Commerce Department, show U.S. exports to South Korea at $3.1 billion, which is a $500 million increase in exports compared to January 2010, and reflects continued demand for U.S. products, technologies and services.
The U.S. and South Korea concluded negotiations in 2007 on a free-trade agreement to lower tariff rates on 95% of all consumer and industrial products, improve transparency and intellectual-property rights protection, and address industrial standards and regulatory issues. The agreement is awaiting passage by both the South Korean and U.S. legislatures.
"The recent announcement on Trade Adjustment Assistance in the Senate should clear the way for Congress to pass the Korus FTA when it returns from August recess; paving the way for exporters in Puerto Rico to enjoy greater access to South Korea's 48 million customers early next year," Troy Stangarone, director of congressional affairs & trade analysis for the Korean Economic Institute, said.
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