Whose Cheese Did The US Korea Agreement Move?

In only one month, the US Korea agreement has pushed forward a key step forward.

Following the formal ratification of the US Congress in October 12th,

On the surface, the agreement between the United States and South Korea should be the two countries.

Korean businessmen

Hope agreement helps industry development

Not long ago, the Korean government disclosed an ambitious plan. The government will once again develop the textile industry as an economic pillar industry and build Korea into the fourth largest textile exporter in the world in 9 years.

According to the official of the Ministry of knowledge economy, according to the new plan, the Korean government needs to push the export of textile industry to 21 billion US dollars in 2020, and its annual growth rate has climbed to 51%.

In the downturn of the global economic situation, the Korean government is still confident that this lofty ambition will be set up. The reason is that the Korean textile and clothing exported to the United States can benefit from the relevant tax reduction clauses after the US Korea agreement comes into force.

What is the positive significance of the US Korea agreement to promote the development of the Korean textile industry? The joint exhibition of South Korean fiber industry said: "if the agreement between the United States and South Korea is effective, the average tariff rate of 13.1% (up to 32%) will be reduced. The competitiveness of Korean products will be greatly improved and the export to the US will be greatly improved.

Moreover, because of the rising labor costs in China, it is very likely that the US investors who can replace enterprises will turn their attention to Korea. "

Since the mid 90s of last century, with the rise of textile industry in China and India, the Korean textile industry has been declining due to the decline in price competitiveness, and the export volume has also been decreasing year by year.

Recently, the Korean textile industry has increased its R & D efforts on high value-added and high performance products, and the industry is showing signs of recovery.

In this critical period, how to promote industrial development has become the most important concern of the industry.

South Korean media said that when the Korea us free trade agreement came into force, the competitiveness of South Korea in Global trade will be significantly enhanced.

As the first Asian country to sign free trade agreements with the European Union and the United States, the brand value of South Korea will be further enhanced. Not only that, South Korea will also have the core strength of the future economic integration in Asia.

According to relevant research reports, if the agreement between the United States and South Korea comes into effect in January next year, South Korea's automobile, textile, steel and shipbuilding industries are expected to benefit from the gradual reduction of tariffs, which will greatly increase exports to the United States.

According to the South Korean government, the US Korea agreement will provide 350 thousand jobs for South Korea. In the next ten years, the gross domestic product (GDP) of the Republic of Korea is expected to increase by about 5.66%.

American industry

Worry about pressure on industrial textiles

Different from the unanimous support of Korean people, the impact of the US textile and garment industry on the US Korea agreement is controversial.

Although the US International Trade Commission is optimistic that the US Korea free trade agreement will benefit us textile exports to Korea, the International Industrial Fabrics Association (IFAI) does not agree with this statement.

IFAI pointed out that, according to the recently ratified agreement of the US Congress, Korean goods will be duty-free into the United States, while the US export to Korea will be subject to 10% VAT.

From this point of view, the US textile industry can not enjoy the reciprocal trade reciprocity policy.

In addition, the biggest entanglements of the US people are that the competition for high alternative textiles, especially industrial textiles, will increase in the US market after opening tariff gates to Korea.

Ruth Stephens Stephens, executive director of the USIFI, said: "the US government has made a wrong calculation. After the agreement comes into force, the domestic textile enterprises in the United States are likely to be at a competitive disadvantage." (Ruth)

In recent years, although the development speed of the textile and garment industry in the United States has slowed down, the special fabric business such as sunshade fabrics and vehicle textiles continues to grow.

The US industry is concerned that the relevant tax reduction provisions of the US Korea agreement will help Korean similar products enter the US market, and then impact on US industrial textiles.

"Although the industrial pfer has made the American garment manufacturing industry move overseas, we still have strong competitiveness in the field of high-tech fiber and industrial textiles. The fabric used for road construction maintains a high growth trend in the control of soil erosion and pollution in the landfill area, and the building textiles such as awning will be our focus.

If South Korea's products pour into the market after tax cuts, our industry will be threatened.

The representative of the International Industrial Fabrics Association said.

In the US industry, the threat theory of Korean textiles is not a conversation. Analysts admit that with the support of the Korean government, South Korea already has a strong textile production capacity.

After the entry into force of the agreement, industrial textiles such as roof membrane and firefighter clothing will flood the US market.

Within a few years, the US textile industry will lose 5000~7000 jobs.

In 2010, the trade deficit between the United States and South Korea's textile industry exceeded 700 thousand US dollars. After the agreement was put into effect, the trade deficit of the two countries' textile industry will further expand.

"In the long run, the US textile industry is likely to see a number of factory mergers, and American companies need to find new products and new markets that are not very competitive."

Ruth and Stephens said.

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Stakeholders

Fear of losing a fair competition platform

Some experts pointed out that the US Korea agreement not only caused a great stir in the domestic textile industry, but also affected China and even the whole Northeast Asia in the field of textile and clothing trade.

At present, there are also some tensions between the US and the textile exporting countries.

The India government is currently focusing on developing a series of development strategies for the textile industry. Robben Ansen, general manager of the textile industry intelligence organization of the country, said: "in my view, the government of India has invested too much energy in the clothing sector.

Now, within Asia, India is struggling to compete with other low-cost countries such as Bangladesh and Vietnam, and the advance of the US Korea agreement will make Korean products occupy a dominant position in the high-end textile and apparel market of the United States.

India's textile industry needs to change its development strategy and focus on exporting yarn and fabric products to countries that are capable of making garments.

Lu Sheng, assistant professor of textile and clothing department of Rhode Island University of the United States, analyzes the impact of China's textile industry. It points out that because the US Korea agreement enables Korean textiles and clothing to enjoy 8%~30% tariff preferences when they export to the United States, it will make China's similar products in a competitive disadvantage, and may even lose their original market share, that is, the impact of the so-called "trade diversion effect".

Lu Sheng believes that in terms of the specific textile terms in the US Korea agreement, the tariff concession arrangement has the most direct and obvious impact on China's textile and apparel exports to the United States, while the rules of origin, customs border measures and safeguard measures may create subtle changes in the trade structure in the medium and long term.

At present, in the field of textile and clothing trade, the scale of the reciprocal free trade agreement has been slightly tilted. South Korea will undoubtedly become the biggest beneficiary of the US Korea agreement, and on the high substitution products, the United States and other textile exporting countries to the United States will lose this "cheese".