Medical Equipment Sector

An Expert's View about Medical, Health and Cosmetics Products in South Korea

Posted on: 11 Jun 2012

Korea is the 4th largest market for U.S. medical equipment exports.

U.S. Department of Commerce International Trade Administration The U.S.-Korea Trade Agreement: Opportunities for the U.S. Medical Equipment Sector The U.S.-Korea Trade Agreement would provide signicant commercial opportunities for U.S. exporters: • Korea is the 4th largest market for U.S. medical equipment exports; failure to pass the U.S.-Korea Trade Agreement could enable exporters from the EU and other countries to gain key advantages over U.S. exporters to Korea. • Estimated duties paid on exports of U.S. medical equipment to Korea were over $195 million from 2008 to 2010. Tari elimination could allow U.S. rms to reinvest in technology and production improvements. • More than 90 percent of medical equipment exports to Korea would receive duty-free treatment within three years of implementation of the U.S.-Korea Trade Agreement; Korean medical equipment taris currently average 5.4 percent, rang- ing up to 50 percent. Medical Equipment Sector Overview U.S. Medical Equipment Exports to Korea • The medical equipment sector accounted for $1.1 billion in U.S. ex- Averaged $1.1 Billion ports to Korea over 2008-10 (average) or nearly 4 percent of total U.S. 1 industrial exports to Korea. $1.4 • Top U.S. medical equipment exports to Korea include surgical instru- $1.2 ments, diagnostic equipment, articial joints and parts, lab reagents, $1.0 and medical appliances. $0.8 2 • In 2009, U.S. production of medical equipment was over $98 billion. $0.6 • The U.S. medical equipment sector employed over 274,000 workers in $0.4 3 2009. $0.2 $0.0 • The Korean market oers areas of opportunity for U.S. exporters of high-end medical equipment due to the new medical facilities sched- 2008 2009 2010 4 uled to open in 2013. • Korea’s medical equipment market, which is currently valued at $2.5 More than 90% of U.S. Medical billion, is forecast to grow 10-15 percent annually in the next sev- Equipment Exports to Korea Would be eral years. In addition to an aging population, continued economic 5 growth will result in demands for better healthcare in Korea. Duty-Free Within Three Years 3% Improved Market Access for U.S. Medical Equipment 7% Exporters to Korea Immediate • Korean medical equipment taris average 5.4 percent, ranging from 3 Y e ars 43% zero to as high as 50 percent. 5 Y e ars 6 • More than 43 percent of U.S. medical equipment exports to Korea 47% 10 Y e ars would receive duty-free treatment immediately upon implementa- tion of the trade agreement. • Taris on an additional 47 percent of medical equipment exports to Korea would be eliminated over three years and taris on a further 3 percent of medical equipment exports would be eliminated over ve years. Taris on the remaining 7 percent of U.S. medical equipment 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 medical equipment used in this report, unless otherwise cited, is the Uruguay Round Medical Equipment sector agreement and includes products within Harmonized System (HS) Chapters 38, 84, 85, 87, 90, and 94. Pharmaceuticals are not covered by this report. 2 U.S. Department of Commerce, U.S. Census Bureau, NAICS 334510, 334517, 339112, 339113 and 339114. Shipments used as a best available proxy for production. 3 U.S. Department of Labor, Bureau of Labor Statistics, NAICS 334510, 339112, and 339113 (non-seasonally adjusted data). 4 U.S. Department of Commerce, U.S. & Foreign Commercial Service, 2010 Country Commercial Guide for Korea. 5 U.S. International Trade Commission, U.S. Korea Free Trade Agreement: Potential Economy-wide and Selected Sectoral Eects, September 2007. 6 Data based on three-year average for 2008-2010. April 2011 Additional information available at: www.trade.gov/KORUS in Billions USD Foreign Competition in the Korean Market • Korea signed a trade agreement with the EU in 2009, which is scheduled 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 negotiat- ing new agreements with Australia, Canada, Colombia, New Zealand, and Turkey; is considering launching FTA negotiations with China; and is exploring re-launching its stalled negotia- tions with Japan. • EU exporters will immediately enjoy an average tari of 1 percent upon entry into force of the EU-Korea FTA, while U.S. exporters will face an average most favored nation (MFN) tari of 5.4 percent until entry into force of the U.S.-Korea Trade 7 Agreement. Key States Exporting to Korea • Top U.S. states exporting medical equipment to Korea include: California, Illinois, Tennessee, Massachusetts, Wisconsin, Minnesota, Indiana, Ohio, Florida, and Pennsylvania. • Other states with a high number of medical equipment companies include New York, Michigan and Georgia. Other Key U.S.-Korea Trade Agreement Commitments for the Medical Equipment Sector • Pharmaceuticals and Medical Devices: The U.S.-Korea Trade Agreement contains principles on facilitating high-quality health care and improving access to safe and eective innovative and generic pharmaceutical products, and medical devices. The agreement has commit- ments to ensure fair, reasonable, and non-discriminatory 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 agreed to adopt, maintain, and enforce measures to promote ethical business practices by prohibiting improper inducements to health care professionals or institutions by pharmaceuti- cal product 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 cooperation. • Health Care Services: Korea also provided meaningful commitments in the areas of health care services, guaranteeing that current health care reforms in special economic zones will be maintained and extending new market access commitments in the areas of higher education and distance adult education. • Technical Barriers to Trade: The U.S.-Korea Trade Agreement strengthens disciplines to promote transparency in the way governments develop and apply technical regulations and related conformity assessment procedures (e.g., testing and certication). For example, Korea agreed to provide national treatment, or the same treatment applied to Koreans, to U.S. persons for participation in the development of standards, technical regulations, and conformity assessment procedures; and to accreditation, licensing or approval of U.S. conformity assessment bodies. 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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