Time to Buy that Samsung Flat Screen

The U.S. and South Korean announced yesterday that they have reached a bilateral free trade agreement – the first of its kind between the U.S. and a major Asian economy. Indeed, in terms of trade volume, “KORUS – FTA” immediately becomes the second most important trade agreement for the U.S. after NAFTA (the North American Free Trade Agreement).



The text of the agreement is not available yet, but the substance appears attractive for U.S. and Korean consumers. Basically, Koreans opened the door to agriculture and U.S. services while the U.S. opens the door to cheaper Korean cars and flat-screen TVs. I doubt there will be much opposition in the U.S. since this causes fairly minimal new pain for the U.S. But who knows with the Democratic Congress? I think South Korea may undergo the more serious domestic battles on this though.



Legally, there do not appear to be any new variations in the typical pattern of U.S. bilateral trade agreements. There appears to be a bilateral investment treaty attached to the trade agreement which should permit U.S. investors to sue South Korea in an international tribunal. It also allows Koreans to sue the U.S., which may actually happen given the large amounts of Korean investment in the U.S. Also, the labor provisions appear to be pretty standard and will not be a serious battle here because (I think) South Korea has pretty stringent labor standards (maybe more stringent than the U.S.). There is a dispute resolution agreement and a special enhanced dispute settlement mechanism for auto-related measures, with strong remedies to deter actions on autos that are inconsistent with the agreement. I’ve never heard of an industry specific dispute resolution mechanism and will be eager to see the actual text of this provision.



In any event, I think it is time to start planning on the long-delayed Samsung flat-screen purchase…