In recent years, telecommunications has become one of the most controversial trade issues between the United States and South Korea. With one of the highest internet usage rates in the world, South Korea is often used as a marketplace for telecom companies to test the most modern wireless products and technologies. The Roh government has called next-generation mobile communications “new engines of growth” that will help Korea achieve President Roh`s 2003 goal of nearly doubling GDP per capita to $20,000 by the end of the decade. To this end, the Korean government may have attempted to establish binding standards for wireless telecommunications services. In April 2004, these efforts led USTR to refer to South Korea as a “Lenient Country of Concern” in its annual report, pursuant to Section 1377, which requires the USTR to assess compliance with international telecommunications agreements by U.S. trading partners. The strengthening of economic interaction between the United States and South Korea has been accompanied by numerous differences of opinion on trade and economic policies. The intensity of disputes has declined significantly since the late 1980s and early 1990s, in part because South Korea implemented a series of comprehensive market-oriented reforms in exchange for securing a $58 billion package from the International Monetary Fund (IMF) after the near-bankruptcy of the South Korean economy in 1997. In recent years, the US and South Korea seem to have become more adept at handling their trade disputes, so they tend to be less fierce than in the 1980s and 1990s. This is partly due to the quarterly bilateral trade meetings at the operational level that have been taking place since the beginning of 2001.
Strategic factors, including the strengthening of South Korea`s economic integration with North Korea, have become problems on the bilateral economic front between the United States and South Korea. During the FTA talks, South Korean officials are trying to ensure preferential tariff treatment for products made by South Korean companies in North Korea`s Kaesong Industrial Zone. In 2003, China overtook the United States as South Korea`s largest trading partner. It is assumed that many South Korean exports to China are intermediate goods that are embedded in products sent to the United States.