Sanchez on US-South Korea FTA: Part 3
In FY12, ITA’s Commercial Service network saw a 29% increase in the number of export to Korea success stories.
The assistance offered exporters by the US Commercial Service, the export arm of the Commerce Department’s International Trade Administration (ITA), is the topic of this last installment in Bill Armbruster’s interview of Francisco J. Sanchez, Commerce Department under secretary for international trade.
Bill Armbruster: Has the ITA/Commercial Service experienced a surge of interest since the FTA took effect nearly a year ago, both in terms of the number of inquiries and visits by US business people?
Francisco J. Sanchez: The Commercial Service (CS) in Korea has experienced increased interest since the agreement was enacted. There has been an increase in the number questions related to country of origin labeling and rules of origin since its implementation (March 2012), as well as questions about procedures relating to certification processes. Since March 15, 2012, CS Korea can trace related inquiries from at least 45 US companies.
A few anecdotal examples: In building materials and renewable energy, CS Korea has witnessed an increase in the number of company inquiries (seeking market opportunities and with questions related to tariff rates and country of origin) since the agreement’s implementation. Almost all products related to these inquiries are receiving tariff benefits. In healthcare-related sectors, the number of visits increased considerably during 2012. This does not seem to be diminishing thus far during 2013. In fact, with a vibrant “Trade Winds” trade mission to Korea scheduled for May 2013, the level of inquiries continues to increase significantly.
Also, in fiscal year 2012, ITA’s CS network saw a 29% increase in the number of export success stories to Korea compared to the previous fiscal year. Some of this increase might well be attributed to the agreement.
Armbruster: To what extent is this interest coming from small and medium companies?
Sanchez: Of the 45 companies that have contacted CS Korea since March 2012, 44 are SMEs. Furthermore, much of the trade we are seeing in the Commercial Service appears to be between US and Korean SMEs. Put another way, Korean delegations we have escorted to US trade shows have generally included Korean SMEs, and they generally import content from US SMEs.
The US-Korea agreement impacts large global companies, but most of the inquiries CS Korea has been involved with have been coming from SMEs. There has certainly been an increased number of companies seeking new export/market opportunities due directly to the benefits under the agreement. CS Korea reports that its workload is not static and, anecdotally, essentially all companies approaching it thus far in 2013 in the “general industry” category are SMEs.
Armbruster: Can you tell to what extent this interest is coming from companies that may be new to exporting or that currently export to just one or two countries?
Sanchez: About 90%, or more, of the inquiries received in CS Korea are from US companies that are currently exporting to at least one or two countries already. Korea is a very well-established and competitive market. If the product or service does not have the proven track record, it is not easy to export to Korea. The bottom line is that most US companies coming to Korea already have years of experience in the export business. They seek advice through CS Korea to either enter the Korean market for the first time or increase their sales. The number of services for US new-to-export companies in Korea has been limited.
Armbruster: What are some of the resources at the Department of Commerce that can assist US exporters looking to do business in Korea?
Sanchez: Our Commercial Service staff is available to provide individualized counseling to determine the best market entry strategy for a given US company/product. To learn more about opportunities in Korea, visit www.export.gov/korea, or visit the nearest US Commercial Service office in the United States (check locations on www.export.gov). Other resources include the FTA Tariff Tool and the Global Knowledge Center.
This is the final installment in Bill Armbruster’s interview with Francisco Sanchez. Part 1 covered benefits for US companies under the US-South Korea FTA; Part 2 focused on opportunities and risks for US exporters in South Korea.
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Francisco J. Sanchez is Under Secretary for International Trade at the US Department of Commerce and leads the International Trade Administration.
Bill Armbruster, the anchor for the Datamyne Blog has covered shipping and trade for 30 years as a reporter and editor with The Journal of Commerce and Shipping Digest.
The opinions expressed in this article are those of its author and do not purport to reflect the opinions or views or Descartes Datamyne. In addition, this article is for general information purposes only and it’s not intended to provide legal advice or opinions of any kind and my not be used for professional or commercial purposes. No one should act, or refrain from acting, based solely on this article without first seeking appropriate legal or other professional advice.
Date posted: April 29, 2013