South Korea FTA brings opportunities
Ratification of the Korea- U.S. Free Trade Agreement (FTA) by the Korean National Assembly last week was a success for the U.S. agricultural sector as well as consumers in South Korea, according to the U.S. Meat Export Federation (US- MEF).
This is true globalization—the highest level of exchange that countries can experience is when consumers can trade goods and services around the world in a borderless economy, US- MEF stated in a release.
“The United States welcomes the Korean National Assembly’s approval of the KORUS FTA,” said U.S. Trade Representative Ron Kirk in a statement. “We look forward to working closely with the government of Korea to bring the agreement into force as soon as possible.”
The FTA has been hailed by meat industry groups, which have estimated U.S. beef exports to South Korea could double to $1.8 billion annually while prospects for pork and poultry exports will also improve.
Korean consumers have endured rampant food inflation, and this trade pact will provide relief, USMEF said.
Tariffs on U.S. beef imported by Korea will drop from 40 percent to zero over 15 years, and duties on U.S. pork, which range from 22.5 percent to 25 percent, will be phased out over two years starting Jan. 1, 2014.
For the American producers and exporters, this pact will create expanded opportunities for red meat exports to a market that has a demonstrated appetite for U.S. beef and pork. Already this year (through September), U.S. beef exports to Korea are up 45 percent in volume and 37 percent in value over 2010 levels, reaching 119,044 metric tons (262.4 million pounds) valued at $527.7 million. Even at that, Korea is just beginning to show the potential it demonstrated in 2003 when it purchased 543.6 million pounds of U.S. beef valued at $815 million.
And U.S. pork exports to Korea through September are up 139 percent in volume and 189 percent in value versus last year, reaching 153,330 metric tons (338 million pounds) valued at $395.1 million.
The value of U.S. red meat exports for American producers has never been higher than it is right now, according to USMEF. Both beef and pork exports are projected to hit record highs, exceeding $5 billion in value this year. And the per-head value of those exports also is at a high, topping $202 per head for beef and $54 for pork. The invigoration of our trading relationship with South Korea will only add more value to that trade that will benefit the U.S. agricultural sector.
The U.S. approved the Colombia, Panama and South Korea FTAs, but the South Korea trade was delayed, waiting on Korean governments negotiation process.
South Korea critics fear the agreement threatens South Korea’s national interests, and opposition party members have attempted to block the vote in the parliament. Opposition came from South Korea’s auto industry and farmers, who fear a flood of U.S. farm exports.
Meanwhile, Kurt Shultz, U.S. Grains Council (USGC) regional director, reported U.S. market share in the Caribbean Basin continues to suffer as South American exports’ growing advantage in Colombia spilled over to a number of other markets in the region.
“The primary destinations for South American corn in order of volume are Colombia, Venezuela, Cuba, the Dominican Republic and now Panama,” Shultz said. “In 2010, corn imports from South America totaled 4 million metric tons (157 million bushels) in the region, and we expect their sales to be the same or stronger this year.
“A tremendous amount of work still needs to be done as our market share in the region is still under attack.”
As an example, Shultz noted that Panama had its first shipment of South American corn at the end of 2010 and has continued importing from South America this year.
“Colombia is the primary driver in this situation,” Shultz commented. “All of this highlights the need for the United States to work urgently to implement the Colombia FTA. If the process takes more than a year, U.S. farmers and exporters will continue to suffer market losses in the region.”
To facilitate the implementation of this legislation, Wendell Shauman, USGC Chairman, Bart Schott, chairman of the National Corn Grower’s Association, and council directors Chris Corry and Floyd Gaibler were traveling to Columbia on Nov. 27. — WLJ