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How much cheaper will American goods get now Korea and the U.S. have concluded a free trade agreement? Of course, consumer prices of imported American goods will not drop immediately as much as tariffs even after the FTA takes effect. It¡¯s possible, for example, that separate taxes may be levied on imported goods, or importers may set their prices strategically high. Tariffs are normally imposed on the import price, so there naturally exists a gap between import and consumer prices -- plus importers tend to be cagey about the exact import price. Taking all that into account, the Chosun Ilbo studied possible price changes of some items to show how consumers could benefit.
¡ß Goods where tariffs are scrapped immediately
This category includes items which Korea does not make or where Korea has an advantage over the U.S. Thus a 5-8 percent tariff will be scrapped on Gold Hills almonds. Their current price of W3,970 (US$1=W936) per 170 g will drop to W3,661-W3,781. Refrigerators also come under this category. An 8 percent tariff immediately lifted on a 703-liter GE refrigerator will lower the current price of W2.2 million to around W2 million. Currently, a mere 5,000 American cars are sold in Korea per year, though that could change due to price cuts. A Ford 500 currently costs W39.8 million. With the 8 percent tariff gone, the price will drop to W36.86 million. A Ford dealer said, "We¡¯re already getting a dozen calls a day asking how much the price cut will be." With the tariffs lifted, Japanese cars made in the U.S. could also be imported. A Toyota Camry 2.4 sells in the U.S. for about W26 million.
Wines are also in this category. The price of Napa Valley Cabernet Sauvignon, the bestselling American wine, will likely fall to W63,700 per bottle, down 15 percent from the current W75,000 when the FTA goes into effect.
¡ß Goods where tariffs are lifted in three to five years
Tariffs for most daily necessities will be lifted in three to 10 years' time. Tariffs of toothpaste and perfume will drop over three years. Glister Multi-Action Fluoride Toothpaste is currently W5,500 per 200g. But when the 8 percent tariff is lifted, its price will fall to W5,060. Polo Black perfume costs 96,000, dropping to W88,320. Tariffs on golf clubs, lobsters and electric shavers will be scrapped completely in five years. Thus a Gillette Fusion razor is currently W12,000 but will drop to 11,040 three years hence. The price of lobsters will plummet. Currently, a 20 percent is levied on Alaska lobsters, so two 650 g Alaska lobsters sell for W65,000. That will drop to W52,000 in five years. But a lobster dealer said, "Most of the lobsters sold in the country are from Canada. In the past, we used to deal in American lobsters a lot, but it¡¯s not easy to find them now because they don¡¯t taste so good.
¡ß Goods where tariffs will be lifted in 10 years or more
The tariffs of most agricultural produce will be lifted in 10 or more years. But due to the wide gap in prices between Korean and American products, imported American agricultural produce will likely affect consumers greatly as soon as they are imported at all. Thus domestic beef sirloin is about W32,000 per kg, 2.7 times the price of American product (W12,000). Even if a 40 percent tariff is levied, American sirloin is still half the price of the variety. Domestic samgyeopsal (fresh bacon) is W12,000 per kg, but the American product W7,500. However, samgyeopsal is unlikely to be affected greatly, because it is imported in large quantities from Chile and Europe at similar prices. The tariff on pork will be lifted in an unusual way. The two countries agreed to scrap tariffs on pork by 2014. But Korea will decide on its own to what extent it will lift them in the meantime. On oranges, the tariff is a very high 50 percent. From September to February, when oranges are in season here, the current tariff rate of 50 percent will be maintained. In other months, a tariff rate of 30 percent will be levied for seven years. Thus Dole oranges, which are currently imported, will be sold for W580 to W800 apiece from September to February, but once the tariff is gone, they will be about half the price.
(englishnews@chosun.com )
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