(September 16, 2010) Governor Arnold Schwarzenegger urged the U.S. Congress to ratify the U.S.-Korea Free Trade Agreement (FTA) during a speech this week at American Chamber of Commerce in Seoul, South Korea during the final days of his trade mission.

The FTA was signed on June 30, 2007, but has yet to be approved by the U.S. Congress. Since that time, South Korea has successfully concluded an FTA with the European Union and is in advanced FTA negotiations with Canada. This increased competition from countries around the world threatens the economic benefit the U.S. and California stand to gain from exports to the Asian country.

In fact, it is estimated by the Trade Partnership Worldwide, LLC, that the failure to approve the U.S.-Korea FTA will result in a U.S. goods export loss of $35 billion, gross domestic product (GDP) loss of $40 billion and an employment loss of 345,000. The economic damage would be similar in California, with a goods export loss of $2.5 billion, GDP loss of $5.2 billion and an employment loss of nearly 40,000.

“One of the most powerful tools to spread freedom, peace and prosperity is free trade and free enterprise. In his State of the Union Address, President Obama pledged to double American exports in five years and I commend him for his vision. Now we need to see the action,” said Governor Schwarzenegger. “The U.S.-Korea Free Trade Agreement, and two others, has been gathering dust in the halls of Congress for over three years. And while we stall, other global leaders are picking up the slack. The ratification of these agreements will lead to increased exports, production and investment, all of which create jobs at a time we need them most. So I say to Congress, if your number one priority is stimulating our economy, approve these free trade agreements so we can start putting people back to work -- not next month, not next year, but right now.”

Benefits

Korea is a significant market for U.S. small and medium-sized companies, which make up a majority of U.S. businesses exporting to Korea. Passage of the U.S.-Korea FTA will eliminate tariffs and other barriers to trade in goods and services, promote economic growth, enhance trade between the United States and Korea, and help expand market access in Korea for U.S. farmers, manufacturers, service providers and financial services firms.

In 2009, California exported $5.9 billion to Korea. Korea is a $1 trillion economy and is the United States’ eighth largest goods trading partner. Korea’s commercial relationship with the United States is largely complementary. In 2009, two-way trade between the two countries topped $69 billion. In 2009, U.S. goods exports to Korea were $28.6 billion, a slight decrease from the previous year. Under the FTA, more than half of current U.S. agricultural exports to Korea will become duty-free immediately, including high-value agricultural products such as almonds, pistachios, wine and cherries. For many other key agricultural goods, such as pork and citrus products, the FTA will provide unparalleled access to the South Korean market and its prosperous consumer base. 

Action Needed

The CalChamber is urging members of the business community to contact California congressional representatives and urge support for the U.S.-Korea FTA.

For further information, visit www.calchamber.com/korea.

Staff Contact: Susanne Stirling