SOUTH KOREA FREE TRADE AGREEMENT

NCBA Staff Contacts: 

Gregg Doud, Chief Economist

gdoud@beef.org

Colin Woodall, Executive Director of Legislative Affairs

cwoodall@beef.org
202-347-0228

Summary:
The U.S. and Korean governments concluded negotiations on a U.S.-South Korea Free Trade Agreement (FTA) on April 1, 2007.  Passage of the U.S.-South Korea is one of NCBA’s goals as part of its “Trade Access Five Point Plan.”

NCBA has said all along that cattlemen will not support the U.S.-South Korea Free Trade Agreement (FTA) until commercially viable beef trade between our two countries is resumed.  Key leaders in Congress have also taken a stance against moving the FTA until trade of all U.S. beef products is resumed.

On April 18, 2008, U.S. and Korean officials announced a trade protocol that will allow the United States to resume exports of beef to South Korea.  Initially, the protocol will allow for the shipment of all U.S. beef products (boneless and bone-in beef, as well as variety meats) from animals under 30 months of age. 

Upon publication of the Unites States enhanced feed rule, Korea has agreed to expand this protocol to include all U.S. beef products from animals of all ages as directed by the World Organization for Animal Health (OIE) guidelines.

Assuming trade resumes as planned, NCBA will ask Congress to consider, support and pass the long-awaited U.S.-South Korea FTA as soon as possible.  For U.S. beef trade, the Korean FTA could be could be the biggest and most important bilateral trade agreement in history.  South Korea potentially represents a $1 billion market and could grow to be the United States’ top beef customer. 

Background:

In 2003, the South Korean market was valued at over $815 million, and South Korean was U.S. cattle producers’ third largest export market.  Like many countries, South Korea closed its market to U.S. beef on December 24, 2003 after discovery of the United States’ first case of BSE.

In September 2006, Korea finally agreed to accept U.S. boneless beef from cattle less than 30 months of age. But this market reopening was never viable for U.S. beef producers because it excluded bone-in beef products, which are popular with Korean consumers. 

NCBA has said we will support this FTA with South Korea if the following issues are resolved:
- re-opening of the South Korean market to U.S. beef
- elimination of Korea’s tariffs on U.S. beef
- resolution of important sanitary and phytosanitary (SPS) issues

Additionally, South Korea imposes some of the highest tariffs on beef imports in the world, bound at 40 percent.  South Korean beef producers are also the second most highly subsidized group of cattlemen in the world behind those in the European Union, but ahead of cattlemen in Japan.

Key Points:

• Any free trade agreement must assure all tariffs on U.S. beef must be reduced to zero. Right now, along with the partial ban, South Korea imposes some of the highest tariffs on beef imports in the world bound at 40 percent.
• South Korean beef producers are the second most heavily subsidized group of cattle raisers in the world, behind the EU but ahead of Japan.
• Cattle producers expect other outstanding sanitary and phytosanitary (SPS) issues to be resolved in the context of the negotiations as well.
• We expect a U.S.-South Korean FTA to follow the important precedents set in other recent FTAs (example: Chile, CAFTA-DR and others) that will assure legitimate market access for U.S. beef and provide improved mechanisms to deal with SPS issues.
• As part of the protocol announced on April 18, 2008, South Korea remarkably agreed to recognize U.S. processing plans as “equivalent” thereby allowing imports from facilities approved by USDA.
• South Korea is a very lucrative market for U.S. beef which could amount to over $1 billion in value.  South Korea could grow to be the United States top export Market for U.S. beef.