USITC Releases Report on Proposed Modifications to the U.S.-Korea Free Trade Agreement Regarding the Staging of Customs Duties for Certain Motor Vehicles

July 2, 2018
News Release 18-081
Inv. No. FTA-103-031
Contact: Peg O'Laughlin, 202-205-1819
USITC Releases Report on Proposed Modifications to the U.S.-Korea Free Trade Agreement Regarding the Staging of Customs Duties for Certain Motor Vehicles

The U.S. International Trade Commission (USITC) today released U.S.-Korea FTA: Advice on Modifications to Duty Rates for Certain Motor Vehicles.

The USITC, an independent, nonpartisan, factfinding federal agency, produced the report at the request of the U.S. Trade Representative (USTR) pursuant to section 104 of the United States-Korea Free Trade Agreement Implementation Act. 

As requested, the report provides advice on the probable economic effect of proposed modifications to the staging of customs duties for certain motor vehicles (light trucks and medium/heavy trucks) under the U.S.-Korea Free Trade Agreement on U.S. trade and on domestic producers of the affected articles.  The proposed modifications would defer the elimination of duties until January 1, 2041.  Because the United States currently imports few or no vehicles covered by the proposed modifications from Korea, the USITC made assumptions concerning Korean market shares and Korean export shares if Korea were to enter the U.S. truck market.  The Commission presents five alternative scenarios in the report and designates one as “most likely.”

Based on the scenario the Commission believes is the most likely, the likely effect of the proposed modification is an avoided increase of U.S. imports from Korea of 59,000 light trucks and 7,600 medium/heavy trucks, assuming Korea enters the U.S. truck market and does so via exports and not exclusively transplant production. Similarly, the likely effect on total production in the United States is an avoided decrease in domestic production of 45,000 light trucks and 3,700 medium/heavy trucks under the same assumptions.

U.S.-Korea FTA: Advice on Modifications to Duty Rates for Certain Motor Vehicles (Inv. No. FTA-103-031, USITC publication 4791, June 2018) is available at https://www.usitc.gov/publications/332/pub4791.pdf.

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