Chemicals Sector

An Expert's View about Chemicals in South Korea

Posted on: 11 Jun 2012

Korea is the 7th largest market for U.S. chemicals exports.

U.S. Department of Commerce International Trade Administration The U.S.-Korea Trade Agreement: Opportunities for the U.S. Chemicals Sector The U.S.-Korea Trade Agreement would provide signicant commercial opportunities for U.S. exporters: • Korea is the 7th largest market for U.S. chemicals exports; failure to pass the U.S.-Korea Trade Agreement could enable ex- porters from the EU and other countries to gain key advantages over U.S. exporters to Korea. • Estimated duties paid on exports of U.S. chemical products to Korea were over $892 million from 2008 to 2010. Tari elimi- nation could allow U.S. rms to reinvest in technology and production improvements. • More than 82 percent of U.S. chemicals exports to Korea would receive duty-free treatment within three years of implemen- tation of the U.S.-Korea Trade Agreement; Korean chemicals taris currently average 6.1 percent, ranging up to 50 percent. Chemicals Sector Overview U.S. ChemicalsExports to Korea • The chemicals sector accounted for $5.4 billion in U.S. exports to Ko- Averaged $5.4 Billion rea over 2008-10 (average) or nearly 18 percent of total U.S. industrial 1 exports to Korea. • Top U.S. chemicals exports to Korea include pharmaceuticals, organic $7.0 chemicals, inorganic chemicals, plastics, and cosmetics. $6.0 • The U.S. chemicals sector, which is highly integrated into the world $5.0 economy and global supply chains, accounted for 18 percent of U.S. $4.0 2 manufacturing production in 2009. $3.0 • U.S. SMEs exported approximately $1.2 billion in chemicals, plastics, $2.0 3 and rubber to Korea in 2008. $1.0 • The U.S. chemicals sector employed over 1.4 million workers in the $0.0 4 United States in 2009. 2008 2009 2010 • The Korean market oers areas of opportunity for U.S. exporters, notably in the area of pharmaceuticals and specialty chemicals, where 5 market demand is continuing to grow. • Korean companies in the medical, pharmaceuticals, and cosmetics industries are particularly interested in using ad- vanced chemical ingredients and materials, an area of particular strength for U.S. exporters. • Imported innovative pharmaceutical products have signicant market share in Korea, with industry sources projecting growth as More than 82% of U.S. Chemicals healthcare expenditures continue to rise, in part due to Korea’s aging Exports to Korea Would be Duty-Free population. Improved Market Access for U.S. Chemicals Exporters Within Three Years to Korea 13% 4% • Korean chemicals taris average 6.1 percent, ranging from zero to 50 Immediate percent. 6 3 Y e ars • Over 50 percent of U.S. chemicals exports to Korea would receive 51% duty-free treatment immediately upon implementation of the trade 5 Y e ars agreement. 31% 10 Y e ars • Taris on an additional 32 percent of chemicals exports to Korea would be eliminated over three years and taris on a further 4 per- cent of chemicals exports would be eliminated over ve years. Taris on the remaining 13 percent of U.S. chemicals exports would be eliminated in equal cuts over ten years. 1 Global Trade Atlas. Calculations by the U.S. Department of Commerce based on import data as reported by Korea. The denition for chemicals used in this report, unless otherwise cited, is based on Harmonized System (HS) Chapters 28-40. 2 U.S. Department of Commerce, U.S. Census Bureau, NAICS 325 and 326. Shipments used as a best available proxy for production. 3 U.S. Department of Commerce, U.S. Census Bureau, NAICS 325 and 326. 4 U.S. Department of Labor, Bureau of Labor Statistics, NAICS 325 and 326 (based on non-seasonally adjusted data). 5 U.S. Department of Commerce, U.S. & Foreign Commercial Service, 2010 Country Commercial Guide for Korea. 6 Data based on three-year average for 2008-2010. Totals do not equal 100 percent due to rounding. April 2011 Additional information available at: www.trade.gov/KORUS in Billions USD Selected Sub-Sectors: • Pharmaceuticals: Korea would eliminate taris on 48 percent of U.S. pharmaceuticals exports immediately upon implementation of the trade agreement, and taris on the remaining 52 percent of exports would be eliminated over three years. • Plastics (Resins and Products): Korea would eliminate taris on 53 percent of U.S. plastics exports immediately upon implementa- tion of the trade agreement. Taris on an additional 30 percent of exports would be eliminated over three years and a further 9 percent over ve years. Taris on the remaining 8 percent of exports would be eliminated over ten years. • Rubber: Korea would eliminate taris on 80 percent of U.S. rubber exports immediately upon implementation of the trade agree- ment. Taris on an additional 2 percent of exports would be eliminated over three years and a further 2 percent over ve years. Taris on the remaining 16 percent of exports would be eliminated over ten years. • Fertilizer & Agro-Chemicals: Korea would eliminate taris on 24 percent of U.S. fertilizer and agro-chemicals exports immediately upon implementation of the trade agreement. Taris on an additional 74 percent of exports would be eliminated over three years and taris on the remaining 2 percent of exports would be eliminated over ve years. Foreign Competition in the Korean Market • Korea signed a trade agreement with the EU in 2009, which is sched- uled to enter into force in July 2011. It also recently signed an FTA with Peru, which is also scheduled to enter into force this year. Korea presently has FTAs in force with ASEAN, Chile, India, Singapore, and EFTA. In addition, Korea is negotiating new agreements with Australia, Canada, Colombia, New Zealand, and Turkey; is considering launching FTA negotiations with China; and is exploring re-launching its stalled negotiations with Japan. • EU chemicals exporters will immediately enjoy an average tari of 0.7 percent upon entry into force of the EU-Korea FTA, while U.S. export- ers will face an average most favored nation (MFN) tari of 6.1 percent 7 until entry into force of the U.S.-Korea Trade Agreement. Key States Exporting to Korea • Top U.S. states exporting chemicals to Korea include: Texas, California, Louisiana, Kentucky, Michigan, New Jersey, Pennsylvania, Ohio, Alabama, and New York. Other Key U.S.-Korea Trade Agreement Commitments for the Chemicals Sector • Rules of Origin: The U.S.-Korea Trade Agreement rules of origin allow only products that are produced in the United States and Korea to receive preferences under the Agreement. The trade agreement rules of origin provide clear requirements for a good to be considered originating, including that a good must be wholly obtained or produced entirely in the territory of the United States or Korea as well as requirements on materials that are used in the production of the good. Importers may claim preferences under the trade agreement based on a certication by the importer, exporter, or producer or based on the importer’s knowledge that the good is originating, but certications need not be in a prescribed format. • Intellectual Property Rights: The trade agreement protects against arbitrary revocation of patents and assures protection for newly developed plant variet- ies and animals and claries that test data submitted to a government for the purpose of product approval would be protected against unfair commercial use. Under the agreement, Korea will be required, after a three year grace period, to implement mea- sures to prevent the marketing of pharmaceutical products that infringe patents and to provide notice when the validity of a pharmaceutical patent is to be challenged. • Pharmaceuticals: The U.S.-Korea Trade Agreement contains principles on facilitating high-quality health care and improving access to safe and eec- tive pharmaceutical products and medical devices. The agreement has commitments to ensure fair, reasonable, and non-discrim- inatory treatment for pharmaceutical products and medical devices and to provide predictability and transparency in the pricing and reimbursement process for pharmaceutical products and medical devices. The United States and Korea have agreed to adopt, maintain, and enforce measures to promote ethical business practices by prohibiting improper inducements to health care profes- sionals or institutions by pharmaceutical and medical device manufacturers. The U.S.-Korea Trade Agreement also establishes a joint Medicines and Medical Devices Committee to monitor implementation of the agreement and promote regulatory coopera- tion. 7 U.S. Department of Commerce calculations based on EU-Korea FTA and U.S.-Korea Trade Agreement tari commitments. April 2011 Additional information available at: www.trade.gov/KORUS U.S. Department of Commerce International Trade Administration The International Trade Administration - Your Global Business Partner The International Trade Administration (ITA) – a division of the U.S. Department of Commerce – strengthens the competitiveness of U.S. industry, promotes trade and investment, and ensures fair trade through the rigorous enforcement of our trade laws and agreements. ITA also utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. For more information on exporting to Korea, please contact: • The ITA office of the U.S. Embassy in Korea at office.seoul@trade.gov or 82-2-397-4535, or by visiting our website www.export.gov/southkorea. • The ITA trade specialist in the U.S. nearest you by visiting www.export.gov/eac. For more information on the U.S.- Korea Trade Agreement, please visit www.export.gov/fta/korea and www.trade.gov/fta/korea. For more information on industry-specific issues, please visit www.trade.gov/mas/index.asp.
Posted: 11 June 2012

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