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Proposed Modifications to the U.S.-Korea FTA Rules of Origin Would Likely Have a Negligible Effect on U.S. Imports and Exports, Says USITC

July 24, 2019
News Release 19-067
Inv. No. TA-103-032
Contact: Peg O'Laughlin, 202-205-1819
Proposed Modifications to the U.S.-Korea FTA Rules of Origin Would Likely Have a Negligible Effect on U.S. Imports and Exports, Says USITC

However, USITC Notifies USTR That Two Domestic Producers Filed Objections

Proposed modifications to the United States-Korea Free Trade Agreement (KORUS) rules of origin are likely to have a negligible effect on U.S. imports and U.S. exports, but they could impact the U.S. industry that produces some of the affected articles, reports the United States International Trade Commission (USITC) in its publication U.S.-Korea FTA: Advice on Modifications to Certain Textile and Apparel Rules of Origin.

The USITC, an independent, nonpartisan, factfinding federal agency, produced the report at the request of the U.S. Trade Representative (USTR).

As requested, the report provides advice on the probable economic effect of the proposed modifications to the U.S.-Korea FTA rules of origin on U.S. trade under the agreement, on total U.S. trade, and on domestic production of the affected articles. The proposed modifications, detailed in the USTR's request letter, cover the following of headings of the Harmonized Tariff Schedule of the United States (HTS):

  • Certain cotton yarns (under HTS heading 5206) with viscose rayon staple fibers (under HTS subheadings 5504.10 or 5507.00);

  • Certain woven fabrics (under HTS heading 5408) with cuprammonium rayon yarns (under HTS subheading 5403.39); and

  • Certain apparel (under HTS heading 6110), accessories, and apparel parts (under HTS heading 6117) of cashmere yarns (under HTS heading 5108).

Each of the proposed modifications to the rules of origin would liberalize the current rules of origin by allowing the use of more non-originating materials. However, because U.S. imports from Korea are a small portion of total U.S imports of the affected articles, and because Korea is not a major producer of the affected articles, the likely effect of the proposed modifications on imports under KORUS and on total U.S. imports of these products is negligible.

Similarly, because the United States exported little to none (both in terms of value and as a share of total U.S. exports of these products) of the affected articles to Korea in 2018, the likely effect of the proposed modification on exports under KORUS and on total U.S. exports would be negligible as well.

The Commission received two objections from domestic producers of two of the articles affected by the proposed modification. One domestic producer of cotton yarns with viscose rayon staple fibers objected to the first of the proposed modifications as they produce the end-use product covered by that modification. Another domestic producer of cashmere yarns objected to the third modification as they produce the input covered by that modification.

U.S.-Korea FTA: Advice on Modifications to Certain Textile and Apparel Rules of Origin (Inv. No. FTA-103-032, USITC publication 4917, June 2019) is available at https://www.usitc.gov/publications/332/pub4917.pdf.

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