U.S.-S. Korea reach trade deal, beef remains an issue

by Ron Sterk
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WASHINGTON — The United States and the Republic of Korea (South Korea) concluded a free trade agreement April 1 but without solving sticking points on U.S. beef and rice exports.

"This is a historic moment for our two countries," said U.S. Trade Representative Susan C. Schwab. "The United States-Korea Free Trade Agreement (KORUS-FTA) will provide U.S. farmers, ranchers, manufacturers and service providers exciting new market opportunities in a growing, dynamic country. It will contribute to Korea’s successful transformation to a 21st century economic power."

The KORUS-FTA represents the United States’ most commercially significant free trade agreement in more than a decade, the U.S.T.R. office said.

Under the agreement, more than $1,000 million worth of U.S. farm exports to Korea will become duty-free immediately, the U.S.T.R. said, and most remaining tariffs and quotas will be phased out over the first 10 years the agreement is in force.

"Historically, Korea has been one of the most protected agricultural markets in the world," the U.S.T.R. office said. "The KORUS-FTA will create highly valuable new export opportunities for American farmers and ranchers by eliminating and phasing out tariffs and quotas on a broad range of products."

But two important issues limiting support of the agreement were resumption of U.S. beef imports and duties on imports of U.S. rice.

"Commercially viable trade for U.S. beef based on World Organization for Animal Health guidelines must be in place with South Korea before A.F.B.F. will consider supporting the U.S.-South Korea free trade agreement," said Bob Stallman, president of the American Farm Bureau Federation. "South Korea continues to unjustifiably ban imports of U.S. beef without regard to international standards. We appreciate the efforts of the U.S. Trade Representative in advocating the interests of U.S. agriculture. Yet, we remain cautious on the final beef outcome and will closely monitor the actions of Korea and its regulatory process over the next 90 days."

The National Cattlemen’s Beef Association (N.C.B.A.) echoed that stance.

"We have said all along that cattlemen will not support the U.S.-South Korea Free Trade Agreement until commercially viable beef trade between our two countries is resumed," said Gregg Doud, chief economist for the N.C.B.A. "If we are not selling beef in Korea, the benefits of this trade agreement and the potential of the Korean market hold little value to U.S. cattle producers."

South Korea banned imports of U.S. beef after bovine spongiform encephalitis (mad cow disease) was discovered in the U.S. in December 2003. While several other Asian countries have since resumed U.S. beef imports, Korea has not.

Although no U.S. beef is being shipped to South Korea now, the agreement does provide for the current 8% to 40% tariff to be eliminated over the next 15 years. It also eliminates the 18% to 30% tariff on U.S. pork imports over a 10-year period.

The agreement did not include any tariff reductions on U.S. rice imports. Rice was a political "hot-button" in South Korea and spawned mass demonstrations opposing its inclusion in the agreement.

In general there has been broad support of the agreement from U.S. business interests, the U.S.T.R. office said. The National Pork Producers Council and National Milk Producers Federation also were supportive.

But the agreement could have trouble getting U.S. congressional support. At least two U.S. Senators, Max Baucus, a Democrat from Montana, and Chuck Grassley, a Republican from Iowa, indicated they would not support the agreement unless South Korea resumed imports of U.S. beef.

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