Beef rejection may impact talks

Cattle Market & Farm Reports, Editorials
Dec 11, 2006
by WLJ

—Third shipment rejected last week.

South Korea said on Dec. 1 it will destroy or return a second shipment of U.S. beef after bone fragments were found in violation of a bilateral agreement that allowed imports of U.S. beef to resume.

Kang Mun-il, a director general at the National Veterinary Research and Quarantine Service affiliated with the Ministry of Agriculture and Forestry, said, “Three bone pieces were found in the second shipment of U.S. beef.”

South Korea, once the world’s third-largest buyer of U.S. beef, has agreed to import only boneless meat from the U.S., ending a three-year ban after an outbreak of bovine spongiform encephalopathy (BSE).

Last month, South Korea found a bone fragment in the first shipment from Arkansas City, KS-based Creekstone Farms. The first nine-ton shipment of U.S. meat will also be either destroyed or returned.

The Korean government has said that consumers there are particularly concerned about BSE, however, in the U.S., many speculate that the rejection of beef because of minute amounts of bone is nothing more than a protectionist measure to prevent more shipments of beef into the country.

USDA and individual packing plants intending to ship to the country asked the South Korean government to inspect boxes individually, but the ministry has no plan to do so, Kang said.

A third shipment of U.S. beef, which had arrived in South Korea on Dec. 1, was also found to contain bone fragments. In all there were reportedly 7 chips found in the third shipment, ranging in size from 3 to 10 millimeters. All three packing plants which have shipped beef containing the bone fragments to Korea have been decertified by the country and will not be allowed to send further shipments. The decertification is largely technical, since most packers refuse to ship beef to the country under such difficult trading conditions.

After the first U.S. beef shipment was rejected, U.S. Agriculture Secretary Mike Johanns accused the South Korean government of “inventing a reason to reject the meat.”
“The market isn’t even close to opening,” Johanns said when the rejection of the shipment was originally announced. Some industry sources in the U.S., in off-the-record comments, have speculated about possible sabotage of the shipments and USDA officials last week asked South Korea to surrender the fragments of bone so they could be analyzed and traced. At the very least the rejections show the market is not a safe bet for exporters, a fact reiterated by Johanns after the third rejection last week.

“I am very disappointed in the decision by South Korea to reject all three U.S. beef shipments sent since South Korean leaders announced on Sept. 11, 2006 that their border is open to U.S. beef. The rejection of the third shipment clearly illustrates that South Korean officials are determined to find an excuse to reject all beef products from the United States,” he said. “There is absolutely no food safety issue with any one of these shipments. I find it difficult to accept that bone fragments the size of one half of a grain of rice were found through visual inspection of ten metric tons of beef, as is South Korea’s claim regarding the third shipment, despite the fact that it went through unusually rigorous inspection by the U.S. exporter before it was shipped. I can only conclude that these actions are designed to restrict beef trade.”

Johanns said he would work with the U.S. Trade Representative to resolve the issue, since it appears that the market will not readliy accept shipments of U.S. beef despite pledges to the contrary.

“Today, South Korean officials have sent the message that their market is not commercially viable for U.S. beef. South Korea is attempting to claim its border is open to U.S. beef while refusing to allow trade to take place. This is unacceptable and certainly not the way trading partners should work with one another,” Johanns said. “It is our intention to work with the U.S. Trade Representative to examine all options available to the U.S. to legitimately open the South Korean market to U.S. beef. Our objective is to implement a trade agreement for beef that reflects science-based international guidelines and facilitates real trade.”

The rejections are expected to be an issue for South Korean and U.S. trade negotiators who are scheduled to hold a fifth round of free trade agreement (FTA) talks next week at the Big Sky Resort in Montana.

However, National Cattlemen’s Beef Association (NCBA) President Mike John, in a letter to President George Bush, said there was no support among cattle producers for an FTA with South Korea, given the current trade problems. The letter to Bush expresses NCBA’s frustration with the continued delay tactics being used by South Korea to block imports of U.S. beef.

“U.S. cattle producers have been extremely patient for almost three years now, but South Korea continues to find baseless excuses to block U.S. beef from access to their market. These protectionist actions are extremely destructive, especially in light of talks regarding a U.S.—South Korea Free Trade Agreement,” John said. “We cannot support agreements with nations who concoct their own trade rules and ignore internationally recognized trade standards. After their continued, unscientific ban on our products we hoped to see a light at the end of the tunnel earlier this year with their promise to accept our boneless beef.”
John said the current rejections of product serve to illustrate that South Korean officials were not bargaining in good faith when they agreed to open the borders earlier this year. In the letter’s conclusion, he sought Bush’s personal attention to the trade dispute.
Aside from the beef issue, South Korea and the U.S. are facing a tough showdown in the Montana round with sensitive trade items such as other farm goods, automobiles and medicine on the agenda.

Both sides want to wrap up the talks by the end of March next year before Bush loses his trade promotion authority, which requires a simple yes-or-no vote by Congress with no amendments.

Following the rejection of the beef shipment, South Korea’s Trade Minister Kim Hyun-jong told lawmakers that the fifth round may not be easy because of the rejection of the first shipment of U.S. beef.

Asked if any settlements will be made in sensitive areas, Kim said it will be very difficult because there were too many sensitive items.

Total two-way trade between South Korea and the U.S. totaled more than $72 billion last year, so the potential for the talks to be derailed because of the beef issue could be extremely costly to consumers in both countries if the Korean government continues to drag its feet in allowing beef shipments to resume with fewer restrictions. — John Robinson, WLJ Editor