Textiles and Apparel Sector

An Expert's View about Textiles, Apparel and Accessories in South Korea

Posted on: 11 Jun 2012

Korea is the 10th largest market for U.S. textile and apparel exports.

U.S. Department of Commerce International Trade Administration The U.S.-Korea Trade Agreement: Opportunities for the U.S. Textiles and Apparel Sector The U.S.-Korea Trade Agreement would provide signicant commercial opportunities for U.S. exporters: • Korea is the 10th largest market for U.S. textile and apparel exports; failure to pass the U.S.-Korea Trade Agree- ment could enable exporters from the EU and other countries to gain key advantages over U.S. exporters to Korea. • Ninety-eight percent of Korea’s tari lines, accounting for approximately 73 percent of U.S. textile and apparel exports to Korea by value would receive duty-free treatment immediately upon implementation of the U.S.-Ko- rea Trade Agreement; Korean textile and apparel taris currently average 10.2 percent, ranging up to 13 percent. Textile and Apparel Industry Overview U.S. Textile and Apparel Exports to • The textile and apparel industry accounted for almost $274 Korea 1 million in U.S. exports to Korea over 2008-2010 (average). Averaged $274 Million U.S. exports of textiles and apparel to Korea increased by 62% percent between 2009 and 2010. $400 $350 • Top U.S. textile and apparel exports to Korea include fabric $300 (felts/nonwovens, specialty and industrial); yarn (laments $250 and spun); men’s and boys’ knit t-shirts and trousers; women’s $200 and girls’ suits and sweaters; infant wear; robes and dressing $150 gowns; underwear; and bedroom furnishings. $100 $50 • In 2010, U.S. production of textiles and apparel was over $66.3 2 $0 billion. 2008 2009 2010 • The U.S. textile and apparel industry employed an average of 3 395,500 workers in the United States in 2010. Improved Market Access for U.S. Textile and Apparel Exporters to Korea • Korean textile and apparel taris average 10.2 percent, ranging from zero to 13 percent. • Approximately 98 percent of tari lines, representing 73 percent of U.S. textile and apparel exports to Korea, would receive duty-free treatment immediately upon entry into force of the trade agreement. 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 negotiating new agree- ments 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. 1 Global Trade Atlas. Calculations by the U.S. Department of Commerce based on import data as reported by Korea. The denition for textiles and apparel used in this report, unless otherwise cited, is based on Harmonized System (HS) Chapters 50-63 and selected products within Chapters 42, 64, 65, 70, and 94. 2 U.S. Department of Commerce, U.S. Census Bureau, NAICS 313, 314 and 315. Shipments used as a best available proxy for production. 3 U.S. Department of Labor, Bureau of Labor Statistics, NAICS 313, 314 and 315 (based on non-seasonally adjusted data). April 2011 Additional information available at: www.trade.gov/KORUS Millions USD • EU textile and apparel exporters will immediately enjoy an average tari of 0.1 percent upon entry into force of the EU-Korea FTA, while U.S. exporters will face an average most favored nation (MFN) tari of 10.2 percent 4 until entry into force of the U.S.-Korea Trade Agreement. • China is the leading exporter of textiles and apparel to Korea, with almost $5 billion or over 57 percent of Ko- rea’s total imports over 2008-2010 on average. The EU27 ($742 million), Japan ($406 million), and the United 5 States ($274 million) are the other leading exporters to Korea. Key States Exporting to Korea • Top U.S. states exporting textiles and apparel to Korea include: California, Georgia, Illinois, New Jersey, New York, North Carolina, South Carolina, and Texas. Other Key U.S.-Korea Trade Agreement Commitments for the Textile and Apparel Sector • Textile Specic Safeguard: The U.S.-Korea Trade Agreement includes a special textile safeguard mechanism which will provide for temporary re-application of MFN taris, if imports under the Agreement increase either absolutely or relative to the domestic market, and are shown to be causing or threatening to cause serious damage to domestic industry. • Rules of Origin: The U.S.-Korea Trade Agreement adopts a “yarn forward” origin rule, meaning that, generally, apparel and other textile products using yarn and fabric from the United States and Korea will qualify for preferential tari treatment. • Elastomeric Yarn Requirement: Consistent with other U.S. free trade agreements, elastomeric yarns must be sourced from the United States or Korea for textile and apparel products to qualify for preferential treatment. • Streamlined Processes to Address Commercial Availability: The U.S.-Korea Trade Agreement includes a unique transitional streamlined commercial availability determina- tion process that will allow bers, yarns, or fabrics that are deemed not commercially available in the United States to be used in the production of articles that still qualify for preferential treatment, subject to a quantita- tive limit in each of the rst ve calendar years in which the Agreement is in force. • Customs Procedures: The U.S.-Korea Trade Agreement includes specic cooperation language for enforcing their respective mea- sures aecting trade in textile and apparel goods, for ensuring the accuracy of claims of origin, and for prevent- ing circumvention of the Agreement’s rules of origin. These provisions provide for signicant information shar- ing between Korean and U.S. Customs authorities, and allow U.S. authorities to conduct verication activities in Korea to ensure that textile products being imported into the United States meet applicable rules of origin and allow U.S. Customs and Border Protection (CBP) to take action whenever textile exporters are breaking the rules – including the denial of entry to suspect goods. These provisions are in addition to the regular CBP processes to ensure vigilance against illegal transshipment from third countries. CBP gathers information on suspected illegal shipments and submits the products to further inspection, and maintains an oce in Seoul to act as its “eyes on the ground.” To make sure CBP has the most recent data and information, it also conducts post-importation verica- tions and summary reviews of goods to ensure their origin. These verications entail reviewing documenta- tion to support the country of origin claim. 4 U.S. Department of Commerce calculations based on EU-Korea FTA and U.S.-Korea Trade Agreement tari commitments. 5 Global Trade Atlas. Calculations by the U.S. Department of Commerce based on import data as reported by Korea. 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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