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FTA between U.S. and South Korea Has Little Effect on Taiwan Fastener Industry at Initial Stage

2011-10-19

The United States has signed the Free Trade Agreements (FTAs) with South Korea, Colombia and Panama. Among which, the FTA with South Korea as the world's 15th largest economy is the most influential. 95% of the U.S. industrial and consumer goods sales to Korean will obtain tariff reduction. It has been estimated that export value of South Korea will increase by US$12 billion per year. South Korea will immediately remove the import tariff of cars and trucks to the US, while the U.S. service industry such as public construction contracts will be able to enter the Korean market more easily. The favorable sectors to South Korea include that the US will reduce tariffs on South Korea’s electronic products, steel and other manufactured goods. It is expected that only a small tariff reduction can substantially increase South Korea’s export value to the US. According to the analyses of Korea Development Institute and other research institutions, after South Korea signs the FTA, its GDP is expected to increase 5.56%.However, according to Taiwan fastener industry response that US-South Korea FTA has little effect on current Taiwan fastener exports to US, because over the years the Korean domestic demand has been the major market for the Korean fasteners, and its exports to the U.S. are a small number, having little impact on Taiwan at the initial stage.