The U.S.-South Korea Free Trade Agreement (KORUS FTA) entered into force on March 15, 2012. It includes provisions to reduce and eliminate bilateral tariff and non-tariff barriers and enhance the rules and disciplines governing the bilateral trade and investment relationship, including issues such as: trade in manufactured goods, agricultural products, and services; foreign investment; government procurement; intellectual property rights; and worker rights and the environment, among other issues. While most of the agreement's provisions went into effect immediately, some are being phased in over the next several years. The United States and South Korea entered into the KORUS FTA as a means to further solidify an already strong bilateral economic relationship. The United States specifically sought increased access to South Korean markets for agricultural products, manufactured goods, services, and foreign investment. The United States likely also sought to maintain its competitiveness in South Korea in the face of Seoul's FTA negotiations with other major trading partners, including the European Union. For South Korean leaders, the KORUS FTA was a mechanism to promote reform in its own economy and also to gain greater access to the U.S. market for autos and other manufactured goods. In general and in the short- to medium-term, the KORUS FTA's largest commercial effects are expected to be microeconomic in nature. In other words, from the perspective of specific industries, the agreement may have a noticeable impact even if its economy-wide effects are modest. However, the increase in the U.S. trade deficit with South Korea since the agreement's entry into force has caused some observers to question the benefits of the agreement, although other factors—including a decrease in South Korea's rate of economic growth—may have been the main drivers of evolving trade patterns. As discussed in the " Implementation Issues " section below, some U.S. companies have argued that certain aspects of the KORUS agreement are not being implemented appropriately. For instance, U.S. exporters have claimed the agreement's effectiveness has been diminished by South Korean customs authorities requiring allegedly excessive documentation to certify rules of origin of imports of U.S. products. U.S. manufacturers also have raised concerns that a proposed South Korean tax credit/tax penalty program for car purchases may discriminate against imports of U.S.-made cars. South Korean and U.S. officials are reportedly working to resolve these issues. Perceptions about the KORUS FTA and its provisions may influence other U.S. trade negotiations, as well as congressional debate over their potential implementation. The most prominent of these is the Trans-Pacific Partnership (TPP), a 12-nation FTA negotiation that now includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, and in which South Korea has signaled an interest in participating. Views on the relative benefits of KORUS may also affect the ongoing Transatlantic Trade and Investment Partnership (T-TIP) negotiations between the United States and the European Union. Many observers have argued that in addition to its economic implications, the KORUS FTA has diplomatic and security implications. For example, they have suggested that it will deepen the U.S.-South Korean alliance by strengthening the bilateral economic relationship. The United States and South Korea have been allies since the United States intervened on the Korean Peninsula in 1950 and fought to repel a North Korean takeover of South Korea. This report examines the provisions of the KORUS FTA and issues related to its implementation in the context of the overall U.S.-South Korean economic relationship, U.S. objectives, and South Korean objectives. It also examines recent trade patterns. Some highlights of the results of the agreement are provided below. Background information and a more detailed examination of the agreement's provisions are provided in the main sections of this report. Under the KORUS FTA's agricultural provisions, South Korea immediately granted duty-free status to almost two-thirds of current U.S. agricultural exports. Tariffs and import quotas on most other agricultural goods will be phased out within 10 years, with a few commodities and food products subject to provisions that phase out such protection by year 23. However, because of their sensitivity, duty-free access for several U.S. products will slowly expand in perpetuity but remain subject to South Korean import quotas. Much effort went into negotiating provisions covering four agricultural commodities of export interest to the United States. Under the KORUS FTA, South Korea agreed to eliminate its 40% tariff on beef muscle meats imported from the United States over a 15-year period. However, negotiators did not reach a breakthrough by the end of the talks on the separate but parallel issue of how to resolve differences on the terms of access for all U.S. beef in a way that would address Korea's human health concerns arising from the 2003 discovery of mad cow disease in the U.S. cattle herd. It was only following the conclusion one year later of a difficult series of negotiations on a separate bilateral understanding on the terms of U.S. beef access to the South Korean market—accompanied by widespread public protests in Korea—that shipments resumed in July 2008. Negotiations on access for U.S. rice and oranges into the South Korean market also were contentious. Rice was a "make-or-break" issue for Seoul, and excluded at South Korea's insistence out of U.S. recognition that if pushed, the talks would likely have collapsed. Special treatment for U.S. oranges was agreed to at the last moment, when negotiators compromised on a multi-part solution expected to increase U.S. navel orange exports over time. In the December 2010 changes to the initial agreement, Korea secured a two-year extension in the tariff phase-out for one commercially important line of U.S. frozen pork product in return for changes the United States sought in its commitments under the auto and other provisions. In June 2011, South Korea's trade minister clarified that the use of certain generic names by U.S. cheese exporters selling to that market will not be restricted by provisions in the EU-Korea (KOREU) FTA. Trade in autos and auto parts proved to be among the most contentious areas tackled by U.S. and South Korean negotiators. In recent years, South Korean auto manufacturers have increased their market share through imports and expanded car production in the United States and other major automotive markets like the European Union. U.S. industry argued that South Korea should eliminate policies and practices that seemingly discriminate against U.S. auto imports. In December 2010, the United States and South Korea reached a joint understanding on automotive trade. Due to these modifications, all three U.S. automakers ultimately supported the KORUS FTA. A detailed discussion of the auto-specific provisions is provided later in this report. A few of the most important provisions are discussed below. The United States will eliminate its tariff of 2.5% on passenger cars, including electric and hybrid vehicles, as of 2016. South Korea cut its passenger car tariff to 4% upon implementation of the KORUS FTA and will remove the remaining tariff in 2016. For trucks, South Korea dropped its 10% duty upon implementation, while the U.S. tariff of 25% will remain in place for seven years and then be phased out entirely by 2021. The KORUS FTA also includes a "snapback provision" that allows the United States to reinstate its 2.5% passenger car tariff, once the duties are completely eliminated, if U.S. automakers claim and the dispute settlement panel finds that South Korea is in violation of the agreement. The snapback could also be imposed due to violations regarding imports of trucks. South Korean commitments regarding a specified group of new and already proposed regulations on automobile fuel economy and greenhouse gas emissions do not seem to be enforceable under the dispute settlement provisions of the KORUS FTA; presumably the snapback will not apply to these commitments. A special motor vehicle safeguard allows the United States to take action if there are "any harmful surges in South Korean auto imports due to the agreement." A safeguard can be initiated by the United Auto Workers union, the domestic auto industry, or the U.S. government. The remedy for finding injury is a snapback to the original tariff levels in place prior to the implementation of the FTA. This remedy can be used more than once and is available for a period of up to 10 years after the concerned tariffs are eliminated. As a remedy under the auto-specific safeguard, the United States will be able to re-impose the 2.5% passenger vehicle tariff. South Korean assembly production in the United States rose to almost 770,000 cars and light trucks in 2013. At more than 750,000 units, nearly an equal number of passenger vehicles and light trucks were imported from South Korea in 2013, up 28% from two years earlier. If U.S.-based producers—including foreign-owned automakers such as BMW or Toyota—meet U.S. federal safety standards, each manufacturer can export as many as 25,000 cars directly to South Korea from the United States without complying with South Korean safety standards. Additionally, they must satisfy KORUS FTA domestic content provisions. U.S. automakers also have some flexibility to be considered in compliance with new South Korean fuel economy and greenhouse gas emissions standards. The Koreans made some concessions on issues that were seen as non-tariff barriers to auto trade involving safety and environmental (e.g., fuel economy and emissions) standards. Trade data show that exports of U.S. autos to South Korea have risen in recent years measured by dollar value and number of units.