Korea, U.S. Enter Official FTA Talks

South Korea is currently the sixth largest market for agricultural exports, with a very real potential for greatly expanded sales of U.S. farm and food products with a free trade agreement. Compiled by staff

Published on: Feb 3, 2006

Stalled world trade talks have helped fast-track bilateral free trade agreements. The latest and most promising is an announcement from the Administration that South Korea and the United States intend to negotiate a bilateral free trade agreement.

Korea is already the world's 10th largest economy and the sixth largest market for agricultural exports. Secretary of Agriculture Mike Johanns says the free trade agreement has the potential to greatly improve access for U.S. producers. Korea already is a significant market for U.S. corn, soybeans, wheat, processed foods, cotton, citrus, nuts and fruit juices.

A statement from U.S. Trade Representative Rob Portman says this is the most commercially significant trade negotiation the U.S. has embarked on in 15 years.  

Historically, South Korea imports about 60-70% of its agricultural needs. In 2004, the total value of South Korean imports of agricultural products from all nations was $14.7 billion, and is estimated at $15.5 billion for 2005. "The United States provides over a fifth of Korea's agricultural imports and that would significantly increase under a free trade agreement that would enhance market access and eliminate remaining trade barriers for U.S. exports," Johanns says. 

Industry pleased with potential of Korean FTA

Beef producers want to make sure a FTA with Korea includes full access to the lucrative beef market the industry enjoyed prior to 2003. Currently only boneless beef is allowed under the current agreement. 

National Cattlemen's Beef Association President and Texas cattle producer Jim McAdams says, "We support the launch of this free trade agreement with South Korea, and expect to see the full re-opening of this market to all U.S. beef, significant reductions of Korea's tariffs, and resolution of important sanitary and phytosanitary issues." 

"The trade agreement must assure all tariffs on U.S. beef be reduced to zero," adds Michelle Reinke, NCBA director of legislative affairs. "Right now, along with the partial ban on U.S. beef, South Korea imposes some of the highest tariffs on beef imports in the world, bound at 40%." 

A statement from the National Pork Producers Council says that a Korean FTA makes U.S. pork competitive with Chilean pork. Chile, a major competitor of U.S. pork, signed a FTA with Korea in 2004 and will receive unlimited duty free access by 2014.

"South Korea is an important export market for U.S. pork producers, but further growth is imperiled by increased South Korean imports of Chilean pork," says NPPC President Don Buhl. "So getting a free trade deal done with South Korea is imperative to U.S. producers." 

Jerry Kozak, President and CEO of the National Milk Producers Federation says, "not all trade agreements are in American dairy producers’ best interests; but a properly negotiated deal with Korea would provide us with an expansion in U.S. dairy exports." 

Despite heavy market access barriers to dairy imports, the U.S. exported $46 million of dairy products to Korea in 2004. Last year saw a significant expansion in U.S. dairy shipments to Korea, likely totaling approximately $58 million for 2005. "Korea provides very attractive growth potential for U.S. dairy exports, particularly for our cheeses," says Tom Suber, President of U.S. Dairy Export Council.