Korean economy has developed with the textile and apparel industries, which are traditionally labor-intensive industry. The Korean textile industry has led Korean economy in the era of multilateral trade agreement, which worked as a protective barrier of developed countries, when the first and second oil shock hit the world in the 1970s. However, it has declined since the 1980s when the developed countries' policies to protect the textile & clothing industry was implemented. As the Uruguay Round was ended in the 1990s, which led to WTO in 1995, the countries with low wages like China, Vietnam and India made a rapid economic growth in accordance with the liberalization of the textile industry. Therefore, this has put Korean textile and apparel industries in more difficult situations.
After the agreement of Korea-Chile FTA in 2004, Korean textile industry has begun to revitalize. So Korea has continued to build FTAs with economic blocs like ASEAN and EFTA. By establishing FTAs with highly advanced economic blocs including the EU and US, Korea can expand its trading scale throughout the world. In particular, FTAs with the EU and US has given Korea an opportunity to increase its market share in local market and to explore new market. In a meantime, Korean textile and apparel industries have faced a tough time due to China, which led the market with lower price. However, the industries have gained competitiveness through higher quality and higher functional textile and apparel products after the establishment of FTAs.
Since 1990s, the U.S. has concluded FTAs with various countries around the world as a way of forming economic blocks just like NAFTA. The common character of FTAs promoted by the US, is that the rule of origin is strictly regulated in terms of textile and apparel products in order to protect its own textile industry. In other words, the US has imposed the relevant regulation by visiting and verifying manufacturing plant directly to block a variety of illegality with regard to the origin of textile and apparel.
As of March 2013, via the Korea-US FTA, Korean textile industry has established a foothold to enter the US market although Korean textile and apparel manufacturing industries have faced a stagnant growth in the past. So the FTA is expected to play a role as a driving force for the industries to revive when tariff levied on the textile and apparel products is immediately eliminated.
The application ratio of the Korea-US FTA has also reached over 70 percent. Currently, the US is persistently carrying out a certificate process on the textile and apparel products imported from the neighboring countries by comparing with NAFTA. Accordingly, it can be a problem for Korean textile and apparel industries to expand its exports without any prior knowledge even though we have a privilege of preferential tariff.
In this regard, this study seeks to investigate the roles of Korea Customs Service (KCS), which implements administration work for verification, and Korea Federation of Textile Industries (KOFOTI), which manages the textile manufacturer information. Based on the examination on two organizations, this study will ultimately find out certain and effective measures to respond to the US government's verification by conducting a research on the verification field concerning textile and apparel products specified in the Korea-U.S. FTA.