The U.S.-Korea FTA

New Opportunities for Small Businesses

Free trade agreements create important new market access and opportunities for U.S. small and medium enterprises (SMEs), and the U.S.-Korea FTA is no exception. More than 18,900 U.S. companies export their products to Korea. Of this total, 16,858—or over 89 percent—were small and medium-sized companies. These SMEs exported $8.2 billion worth of merchandise to Korea in 2005, an increase of over $500 million from 2004. This total represented 32.8 percent of all U.S. exports to Korea—above the 29 percent share of U.S. exports that our smaller companies contribute globally.

How will the U.S.-Korea FTA open the door to new export opportunities for American small businesses?

Tariffs

The U.S.-Korea FTA will immediately eliminate tariffs on 95 percent of bilateral trade on industrial and consumer goods, and on nearly two-thirds of U.S. agriculture exports to Korea. By lowering the costs of exporting to Korea, the FTA will make sales to Korea affordable for many SMEs for the first time. In sectors such as electronics—which accounts for nearly 10 percent of all U.S.-Korea trade, SMEs—which make up 94 percent of all computer and electronic export firms in the United States—stand to gain significant opportunities.

Non-Tariff Barriers

The U.S.-Korea FTA tackles numerous non-tariff barriers that are obstacles to market access in Korea for small businesses by restricting investment and adding to the fixed costs of doing business. Small businesses need transparent, predictable, and consistent trade rules, and the U.S.-Korea FTA will enhance regulatory transparency—making the Korean market easier for SMEs to enter and navigate.

Intellectual Property

Trade agreements protect the innovation and creative content captured in so many U.S. SME exports. The U.S.-Korea FTA includes the strongest intellectual property protections of any U.S. FTA, and will promote the ability of SMEs to offer their products in one of the world’s most high-tech markets.

Services

The U.S.-Korea FTA creates new openings in Korea’s market for U.S. service providers across all sectors, expanding opportunities for efficient and innovative smaller companies with the potential to develop into world-class exporters.

Government Procurement

The agreement will give U.S. small businesses increased access to Korean government procurement contracts by lowering the threshold at which there must be nondiscriminatory access and by including Korean government agencies that previously were not open.

Trade Facilitation

The U.S.-Korea FTA will make e-commerce duty-free and speed up the customs clearance process, which will make Korea a more affordable and accessible market for American small businesses.