MHTA – A new trade agreement that goes into effect this week will increase trade opportunities for Minnesota companies that send exports to South Korea.
Under the United States-Korea Free Trade Agreement, nearly 80 percent of U.S. exports of consumer and industrial products to South Korea will become duty free, effective March 15. Nearly 95 percent of the products exchanged by the two countries will become duty free within five years, and most remaining tariffs will be eliminated within 10 years.
“This is the most commercially significant free trade agreement for the United States in more than 16 years,” said Katie Clark, executive director of the Minnesota Trade Office (MTO). “The agreement will have a big impact on Minnesota companies, which sent $702 million worth of products to South Korea last year.”
South Korea is Minnesota’s sixth-largest export market, led by sales of such products as machinery, computers and electronics, and food. Minnesota exports to South Korea were up nearly 26 percent in the last three months of last year, the biggest increase for any of the state’s top export markets in the fourth quarter.
The agreement also is expected to improve opportunities for manufacturing, investments, financial services, government procurement and environmental commitments.
In the area of financial services, the agreement will increase access to the South Korean market and ensure greater transparency and fair treatment for U.S. suppliers of financial services. The trade agreement will address non-tariff barriers in a wide range of sectors and includes strong provisions on competition policy, labor and environment, and transparency and regulatory due process.
Overall, the U.S. International Trade Commission estimated the agreement on goods alone will add $10 billion to $12 billion in U.S. gross domestic product and about $10 billion in annual exports to South Korea.