KORUS rule of origin changes to have negligible effect - Just Style
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KORUS rule of origin changes to have negligible effect

By Giacomo Lee 30 Jul 2019

Proposed modifications to some apparel and textile rules of origin in the new United States-Korea Free Trade Agreement (KORUS) would likely have a negligible effect on US imports and exports – but they could impact the US industry that produces some of the affected articles.

The assessment follows a request by the Korean government last October to add some textile products to the short supply list under the revised bilateral free trade agreement, which came into effect on 1 January 2019:

  • Certain cotton yarns (under HTS heading 5206) with viscose rayon staple fibers (under HTS subheadings 5504.10 or 5507.00);
  • Certain woven fabrics (under HTS heading 5408) with cuprammonium rayon yarns (under HTS subheading 5403.39); and
  • Certain apparel (under HTS heading 6110), accessories, and apparel parts (under HTS heading 6117) of cashmere yarns (under HTS heading 5108).

A report – ‘US-Korea FTA: Advice on Modifications to Certain Textile and Apparel Rules of Origin’ – by the United States International Trade Commission (USITC), says each of the proposed modifications to the rules of origin would liberalise the current rules of origin by allowing the use of more non-originating materials.

However, because US imports from Korea are a small portion of total US imports of the affected articles, and because Korea is not a major producer of the affected articles, the likely effect of the proposed modifications on imports under KORUS and on total US imports of these products is negligible.

It adds: “Similarly, because the United States exported little to none (both in terms of value and as a share of total US exports of these products) of the affected articles to Korea in 2018, the likely effect of the proposed modification on exports under KORUS and on total US exports would be negligible as well.”

USITC says it received two objections from domestic producers of two of the articles affected by the proposed modification. One domestic producer of cotton yarns with viscose rayon staple fibres objected to the first of the proposed modifications as it produces the end-use product covered by that modification. Another domestic producer of cashmere yarns objected to the third modification as it produces the input covered by that modification.

According to the re:source by just-style strategic sourcing tool, KORUS offers qualifying South Korean textiles and apparel, travel goods and footwear duty-free access to the US market.

However, the value of US apparel imports from South Korea in 2018 totalled US$222.8m, a drop of 2.3% on the previous year – with the country accounting for just 0.27% of the US apparel import market share.