KORUS FTA to benefit Korean textile industry – Experts

24 Feb '12

2 min read

The Korea-United States Free Trade Agreement (KORUS FTA) that is scheduled to become effective from March 15, 2012, will benefit South Korean textile industry, according to experts.

It is because, as per the FTA, South Korean textile exports to the US will enter duty-free, while South Korea will continue to levy a 10 percent value added tax (VAT) on its imports of textiles from the US.

Secondly, according to experts, the 35 percent threshold clause will also help South Korea to increase its textile item exports to the US.

Under the clause, any product made in Korea using only 35 percent of raw materials from South Korea can be labeled as a South Korean product, and it can gain zero-duty access to the US market.

Experts say this clause will enable South Korea to procure some of its raw materials from neighbouring countries, without depending on the US for availing the benefit of FTA.

KORUS FTA is considered to be the most significant trade agreement for the US after the North American Free Trade Agreement (NAFTA) of 1994.

It will open up South Korea's US$ 1 trillion economy for American workers, as the agreement envisages enforcement of fair labour laws that would allow US workers to compete in South Korea.

In addition, around 80 percent of US industrial goods and nearly two-thirds of US agricultural exports to South Korea would not attract any duty, which is estimated to add US$ 10-12 billion annually to the US GDP.

Fibre2fashion News Desk - India

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