Korea, U.S. Swap Tariff Cut Proposals

Korea and the U.S. exchanged tariff cut proposals on August 15 through the U.S. embassy as a step to reach a free trade agreement. The proposals include 11,261 items in manufactured goods, agricultural products and textiles.

In the second round of FTA negotiations, both sides agreed on a phased implementation of the elimination of tariffs on manufactured goods. The proposals allow for a five-tiered lifting of tariffs from the day the proposals come into effect. The five tiers are immediate elimination, elimination within three, five and 10 years, and longer grace periods (no opening or over-10-year implementation).

Instead of unveiling a full list of items on the proposals, the Office of the Minister for Trade said, “some sensitive items, including rice in agriculture, were excluded from the proposals.” The office reportedly called for an opening in textiles and apparel, sensitivities to the U.S., within five years.

After reviewing each other’s proposals, negotiators will participate in the third round of talks in Seattle between September 6 and 9, where the specific implementation periods will be discussed on each item.

On the pharmaceutical front, the U.S. negotiators walked out of the talks on medical device to protest the Korean government’s adoption of the “positive system” concerning its national medical insurance scheme. Under the new system, the government will only reimburse patients for medicines that are considered more effective and less expensive. The halted talks will resume on August 21 and 22 in Singapore.

smhong@donga.com