|President Lee Myung-bak and U.S President Barack Obama wave as welcoming ceremony for the Nuclear Security Summit starts at the Coex Center in Seoul, on March 26.|
The free trade agreement between Korea and the U.S. led to an average reduction of 7 percent in wholesale prices and 6.3 percent in retail prices of products imported from the U.S., a think tank under the Korea International Trade Association and the Korea Importers Association said in a report Sunday.
Wine and beer (13 percent), fruits and nuts (9.6 percent) and meat and fisheries (7.7 percent) were among the items that showed the sharpest price cuts in the first month under the FTA.
Medicine and vitamin prices marked a relatively slow decline of 2.7 percent.
The report was based on a survey of 203 companies that import goods of which the tariffs have been cut by 5 percent or more after the FTA took effect on March 15, the KITA Institute for International Trade said.
About three-quarters of the companies said they had already reduced wholesale prices (28.6 percent) or plan to do so (47.3 percent).
Some 72.4 percent said retail prices have been marked down (17.2 percent) or are expected to be cut (55.2 percent).
Ninety-eight percent of the firms said they were making use of the FTA (56.2 percent) or planning to do so (41.9 percent), according to the survey.
In particular, a company that imports American pork said wholesale and retail prices have been rolled back by 8-9 percent.
An orange importer and an orange juice importer said the price cuts were between 10 and 15 percent, and between 10 and 20 percent, respectively.
An importer of musical instruments said they had already brought down prices by 6-8 percent, and planned additional cuts within the next three months.
Wine importers have scaled down prices by 10 to 15 percent, and car importers by 2-7 percent since late last year. Tariffs on autos were reduced from 8 percent to 4 percent immediately as the FTA went into effect, and will be eliminated four years later.
Several companies, however, were found to be having trouble making appropriate use of the FTA due to a lack of information.
Under the Korea-U.S. FTA, unlike other FTAs, the certificates of origin which are required to get the tariff benefits can be filed by producers, exporters or importers, but many companies were not aware of this, causing a great deal of confusion.
“Detailed education on the information concerning FTA tariff rates and paperwork is therefore necessary for Korean importers,” the KITA IIT said in the report.
“There are also many cases in which the exporters are not prepared enough to make use of the FTA, raising the need for publicity and education in the U.S.”
Song Song-yi, a senior researcher at the IIT, called for stronger monitoring by consumer groups of the effect of the tariff cuts and tougher government measures for fair import and distribution practices, citing the relatively huge impact of the Korea-U.S. FTA on consumer welfare.
By Kim So-hyun (email@example.com)