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Coble, Spratt call for better trade deal with Korea
Story Date: 8/3/2010
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Source: Press Release, 8/2/10
The cochairmen of the Congressional Textile Caucus today are urging the U.S. Trade Representative to negotiate a fair trading relationship with South Korea. In a letter today to USTR Ron Kirk, U.S. Reps. Howard Coble (R-NC) and John Spratt (D-SC) said that the proposed free trade agreement with Korea harms American textile producers.
“We believe the current agreement will place domestic producers at a distinct disadvantage,” Reps. Coble and Spratt wrote to Ambassador Kirk, “by allowing a massive flow of highly technical industrial textiles from Korea into the United States with few opportunities for reciprocal export of U.S. products to Korea. In its current form, the net result of this free trade agreement (FTA) will likely be further job losses in segments of an industry critical to our districts. For this reason we ask that, as you reopen the automotive and beef sectors of the agreement, you also revisit the textile provisions and revise sections that could cause great harm to the domestic textile industry.
“While we recognize that the current FTA framework was negotiated by the previous administration, we want to voice our strenuous objections to the tariff schedule proposed by the Korean government. We take great exception to the fact that the tariff phase-out schedules for 52 highly technical industrial textile products are nonreciprocal, providing Korea with a much more generous tariff elimination schedule than what is afforded U.S. producers and exporters. Since the purpose of this agreement is to provide fair and equitable treatment to all parties, the United States simply cannot accept an agreement that places U.S. manufacturers and workers at such a blatant disadvantage. An agreement cannot be called 'free trade’ when one party imposes tariffs on imports and the other party does not. We do not believe Korea’s highly sophisticated textile sector should be granted further assistance in accessing the U.S. market through nonreciprocal tariff preferences.
“Furthermore, 60 percent of sensitive product tariff lines are duty free immediately for Korean imports, with an additional 29 percent falling under the five year phase-out. Only 10 percent of the sensitive tariff lines critical to U.S. companies have the longest (10 year) phase-out period. This is contrary to the advice of Congressional Textile Caucus members and the domestic industry throughout the negotiation process, as well as contrary to previous FTA negotiations. The Republic of Korea was the 2nd largest supplier of textiles by volume to the U.S. for the year ending in December 2009. By contrast, industrial textile exports from the U.S. to Korea by volume in 2009 do not even show Korea among the top 10 purchasers. Exposing sensitive portions of the textile industry to immediate duty phase-outs will increase the possibility of further job losses and plant closings in the United States. At a time of high unemployment, this is not sound policy.
“Finally, we note that while the current FTA framework will give goods of Korean origin duty-free entry into the U.S. market, U.S. exports to Korea will still be subject to a 10% Value Added Tax (VAT). It is misleading for U.S. officials to speak of zero-for-zero duty reductions when the U.S. imposes no comparable border tax on imports from Korea. Remedying this inequity should be part of any Korea FTA. Provisions such as these are persistent examples of FTAs placing domestic companies at a competitive disadvantage.
“We agree with your comments to workers at Allegheny Technologies Incorporated that U.S. workers must be placed on an even footing with foreign competitors and that, in order for trade to be free, we must ensure our trading partners adhere to trade agreements and respect U.S. trading rights. Put simply, free trade agreements must apply the same rules to both parties. To accept an agreement that imposes a non-reciprocal tariff schedule violates the most basic concept of free trade. We urge you to revisit the textile and apparel section of the Korea FTA and look forward to working with you in the future on this important agreement.”
The letter, cosigned by Congressmen Coble and Spratt, was being delivered to Ambassador Kirk’s office today.
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