Trade progress may boost agricultural exports

by Jay Sjerven
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Recent meetings between President Barack Obama and his Russian and South Korean counterparts produced agreements that may prove pivotal to the administration’s efforts to double exports, including agricultural exports, over the next five years.

In the span of two days, President Obama announced Russia will lift its five-month ban on U.S. poultry product imports, and he directed the Office of the U.S. Trade Representative to revitalize talks with the Government of South Korea with the aim of resolving outstanding issues relating to the Korea-United States Free Trade Agreement (KORUS) before the next G-8 meeting scheduled for Seoul in November. President Obama said he hoped to submit KORUS, as adjusted during negotiations, to Congress for ratification early next year.

During a joint press conference with Russian President Dmitry Medvedev on June 24, on the occasion of a U.S.-Russia business summit in Washington, President Obama said, “We reached an agreement that will allow the United States to begin exporting our poultry products to Russia once again. I want to again thank President Medvedev and his team for resolving this issue, which is an important signal about Russia’s seriousness about achieving membership in the World Trade Organization.”

Russia banned U.S. poultry products beginning in January 2010 because of the use of chlorinated water rinses during poultry processing at U.S. facilities. The rinses are used to reduce pathogens and never before were said to have been a matter of concern to Russia, which before the ban was the largest importer of U.S. poultry products. U.S. poultry product exports to Russia during the past three years averaged about $800 million in value. The Russian ban resulted in a 14% decrease in the volume of U.S. poultry product exports worldwide during the first five months of 2010.

Under the agreement announced by the presidents, the United States will publish information for domestic poultry processors on the U.S. Department of Agriculture’s web site about which disinfectants and pathogen-reduction treatments are known to be approved by Russia for use on poultry and food generally. The United States will provide information to Russia on the solutions companies use on poultry shipped to Russia. In addition, the United States will provide Russia an updated list of poultry processing facilities authorized to ship poultry to Russia.

The U.S. poultry industry was elated.

“The reopening of the Russian market is good news for American chicken producers and processors,” said George Watts, president of the National Chicken Council, Washington. “We thank President Obama and government officials and members of Congress who were involved in resolving this issue.”

Following the U.S.-Russia business summit, President Obama traveled to Toronto to attend the G-20 summit. While in Toronto, the president met with South Korean President Lee Myung-bak on June 26. The presidents discussed security issues in the wake of the recent sinking of a South Korean naval vessel by the North Korean forces and trade.

After meeting with President Lee, President Obama addressed U.S.-Korea trade issues, stating, “There has been a lengthy negotiation to arrive at a free trade agreement. The last time I was in Korea, I said that I would be committed to moving this forward. And today, I indicated to President Lee that it is time that our U.S. Trade Representative work very closely with his counterpart from the Republic of Korea to make sure that we set a path, a road, so that I can present this free trade agreement to Congress.”

The Korea-U.S. Free Trade Agreement (KORUS) was signed by the United States and the Republic of Korea on June 30, 2007. But the treaty was never submitted to the Congress for ratification primarily because of strong opposition from U.S. automakers and auto worker unions, who claimed while South Korean autos are widely sold in the United States, unfair obstacles remain to establishing a level playing field for U.S. autos in South Korea.

For agricultural products, KORUS on implementation would immediately eliminate or phase out tariffs and quotas on a broad range of products with almost two-thirds (by value) of Korea’s agricultural imports from the United States becoming duty free when the agreement enters into force. South Korea already is the fifth-largest market for U.S. agricultural products. That nation’s annual purchases of U.S. agricultural products during the past five years averaged $4 billion.

“We’re extremely encouraged that the administration is making it clear to Congress that it’s time to finally move forward on this critical trade deal,” said Steve Foglesong, president of the National Cattlemen’s Beef Association. “The KORUS F.T.A. could potentially be one of the most significant bilateral trade agreements in our history.”

The U.S. beef industry in recent years has made progress toward reestablishing South Korea as a major market. U.S. beef exports to that country were shut down at the end of 2003 when South Korea banned U.S. beef because of a case of bovine spongiform encephalopathy (B.S.E.) in the United States. After negotiations, the ban was lifted with restrictions, and U.S. beef exports to Korea began to expand while still lagging pre-ban levels. A concern of the industry and members of Congress was to ensure the agreement would prevent Korea from erecting barriers not based in science to restrict U.S. beef and other agricultural exports.

Mr. Foglesong observed before the shutoff in trade in December 2003, U.S. beef exports to that country that year already reached $815 million in value. If KORUS enters into force, South Korea may eventually be a $1 billion market for U.S. beef products, Mr. Foglesong asserted.

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