KORUS Enters Into Force

On Thursday, March 15, 2012, the Korea-United States free trade agreement (KORUS) entered into
force. KORUS was passed by the U.S. Congress and signed by President Barack Obama in October 2011
and was ratified by the South Korean National Assembly the following month. A recent statement
issued by the United States Trade Representative (USTR) notes KORUS “is the United States’ most
commercially significant free trade agreement (FTA) in almost 20 years.”

KORUS is the United States’ first FTA with a major Asian economy and the first since the
North America Free Trade Agreement with a country that has a large developed textile sector that
exports significant amounts of textile product to the United States. South Korea is the
fifth-largest exporter of textile products to the United States, reports the National Council of
Textile Organizations (NCTO); and the 10th-largest market for U.S. textile and apparel exports,
reports the U.S. Department of Commerce’s International Trade Administration (ITA).

USTR Ambassador Ron Kirk issued the following statement on the agreement’s entry into force:
“Starting today, Korea’s doors are wide open for Made-In-America exports that will support
well-paying jobs here at home. From manufactured goods to telecommunications services to
agricultural products, more Americans can get back to work making merchandise, providing services,
and growing crops for export to Korea. The U.S.-Korea agreement is a landmark deal with an
important ally. It was on the leading edge of President Obama’s drive to craft trade policy that
addresses the real barriers that our exporters and workers face, and we are pleased that it will
start generating benefits today in both the United States and Korea.”

The U.S. textile and apparel industry’s reaction to KORUS has been mixed. Proponents of
KORUS, including retailers and importers, say the agreement will create jobs and reduce trade
barriers, making it easier for U.S. companies to export their goods overseas. The National Retail
Federation and the American Apparel & Footwear Association have voiced strong support for the

Opponents of KORUS — such as U.S. textile manufacturers and organizations including the
National Textile Association, the American Manufacturing Trade Action Coalition (AMTAC), the United
States Industrial Fabrics Institute (USIFI) and NCTO — charge that rather than creating jobs, the
FTA will result in continued outsourcing and job destruction, because U.S. and Korean textile
products are not treated equally under the agreement and removal of certain textile enforcement
measures will enable significant illegal duty-free transshipments of Chinese-made goods.
Additionally, KORUS requires the United States to reduce tariffs more quickly than South Korea, and
opponents are concerned this provision does not allow U.S. suppliers the chance to adapt, and will
favor the Korean industry in key products. Both USIFI and AMTAC noted in statements opposing the
FTA that the United States International Trade Commission (USITC) has estimated that U.S. textile
and apparel output would decline as a result of KORUS. USITC also has estimated that
percentage-wise, that decline would be the largest experienced by any sector, citing expected
increases in U.S. imports from South Korea as the driving factor.

March 21, 2012