On Friday, December 7, 2018, the South Korean parliament approved a modified version of the U.S.-Korea Trade Agreement, otherwise known as KORUS. With passage of the renegotiated agreement, Korea is now ready to implement the new terms on January 1, 2019.
KORUS first went into effect in 2012, but many in the U.S. business community had concerns about Korea’s implementation of key market access provisions. In April 2017, the United States and Korea began renegotiating the terms of KORUS, and the parties signed a revised version of the agreement in September 2018. In seeking an updated deal, President Trump expressed disappointment in the U.S. goods trade deficit with Korea, measuring $23.1 billion in 2017, notwithstanding the United States’ growing surplus in services trade with that country.
The renegotiated KORUS increases Korean market access for a number of American exports. Perhaps the most significant provisions of the new agreement relate to new rules for American automobile exports to Korea, including a doubling of the cap on the number of automobile exports and acceptance of U.S. emissions standards. Other key changes address Korea’s burdensome customs verification procedures and its pharmaceutical pricing and reimbursement policy. The revamped automobile trade terms, however, were expected to present the biggest political hurdle to passage of the updated agreement in the Korean parliament given the importance of that country’s domestic automobile industry. With that challenge now overcome, and with no congressional approval requirement in the United States, the revised agreement will go into effect in both countries.