Over 250 New Jersey Auctions End Tomorrow 09/26 - Bid Now
Over 60 Total Lots Up For Auction at One Location - CA 10/05

S. Korea free trade agreement -- a win for medical device companies?

by Brendon Nafziger, DOTmed News Associate Editor | October 13, 2011
A free trade agreement with South Korea passed yesterday by the U.S. Congress could boost medical device exports to one of the industry's biggest markets, manufacturers say.

The agreement, which still has to be ratified by the Korean government, was one of three long-simmering trade pacts cleared Wednesday by Congress, and has been hailed as the country's largest free trade agreement since the passage of the North American Free Trade Agreement, in 1994. Other FTA's passed include deals with Panama and Colombia. All now head to President Obama's desk to be signed.

According to U.S. International Trade Commission estimates, the Korean deal, by killing tariffs and quotas, could add $10 to $12 billion to the U.S. GDP.

Advanced Medical Technology Association, a medical device manufacturer trade lobby, welcomed the agreement with Korea, the 13th largest economy in the world by GDP and the fourth-largest market for U.S. medical device exports, according to the International Trade Administration.

"We applaud the U.S. Congress for its swift passage of the U.S.-Korea Free Trade Agreement," Stephen Ubl, AdvaMed's president and CEO, said in a statement. "Passage of this legislation is critical to efforts to expand market access for U.S. products abroad and will help improve U.S. competitiveness in a global economy. "

He said U.S. manufacturers exported $875 million worth of med tech products to Korea last year, while Korea exported $331 million to the United States.

According to the ITA, once the agreement goes into effect with Korea, around 43 percent of U.S. medical equipment exports would immediately receive duty-free treatment from Korea, with 90 percent of equipment getting duty-free status within three years. The remaining tariffs would be eliminated over the next decade, the ITA said.

Current tariffs on U.S. medical device exports to Korea average 5.4 percent, but can go as high as 50 percent, the ITA said.

Business vs. labor

While business interests such as Walmart have long pushed for the pacts, saying they will buoy exports and thus preserve American jobs, labor groups fret a smoother path for imports on Korean cars and other products will drive further job losses in a country already wracked by 9 percent unemployment.

The U.S. Chamber of Commerce, which has long supported the agreements, said by passing them the country has saved over 338,000 jobs, because of the opening up of foreign markets. The Obama administration has also said that the Korean deal alone will create upwards of 70,000 jobs.

However, Rep. John Conyers, a Democrat from Michigan, writing in the Huffington Post, noted that the Korean FTA, originally developed under President Bush, does not include references to global labor standards, and does "nothing to require South Korean labor law to be put on equal footing with U.S. law." Under South Korean law, for instance, striking workers can be fired and sued for the company's lost earnings, he said.

The Economic Policy Institute, a union-linked think tank, also disputed the Chamber of Commerce's rosier predictions, saying the deal would lead to the loss of 159,000 American jobs in the first seven years after passage and would increase the trade deficit with South Korea by $16.7 billion.

Used, refurbished export status in Korea

While Korea is a large market for medical device companies, it's considered "restricted" by the U.S. Trade Commission for used or refurbished products. Although used equipment imports are legal, they generally face the same requirements as brand new products, and require a certificate from the Food and Drug Administration, extensive technical information, and pre- and post-market testing in a Korean lab, the ITA said in a 2008 report.

Still, CT scanners, ultrasound equipment and clinical chemistry analyzers are considered among the most popular used imports in Korea. In 2006, the most recent year data is available from the ITA's report, over 34 used CT scanners, or a little over $1 million worth, were imported to the country.

You Must Be Logged In To Post A Comment