Implementation of the free-trade agreement between the United States and Korea, originally approved in 2007, was a hot topic at World Pork Expo Thursday in Des Moines, Iowa. Waiting for the agreement to be implemented poses a huge risk to the U.S. pork industry.
Currently, the United States is the largest supplier of pork to the South Korean market. However, tariffs placed on the U.S. product severely inhibit any growth in exports to the country.
“We believe that implementation of the U.S. free-trade agreement with Korea (KORUS) is the single most important trade issue to the U.S. pork industry,” says Nick Giordano, vice president, international affairs for the National Pork Producers Council. “We need to get KORUS implemented as soon as possible.”
Without implementation of KORUS, the U.S. pork industry could lose on two fronts. Growth of exports to this important market would be unlikely plus any future exports would be placed in jeopardy.
“Implementing the KORUS free-trade agreement could strengthen the alliance between our countries,” said Jong Choi, Korean economic affairs minister, at a press briefing Thursday at World Pork Expo in Des Moines, Iowa. “Korea is the 15th largest economy in the world and we recently signed a free-trade agreement with Chile which has dramatically increased our pork imports from that country.”
While the United States delays implementation of KORUS, Korea continues to move forward in developing trade relations with Chile, Canada and European Union countries, among others. Current or potential agreements with these trading partners could result in closing the door to U.S. pork exports completely.
The current levels of U.S. pork exports to Korea have been achieved even with added tariffs of 22.5 percent. Under the terms of KORUS, the tariffs on U.S. frozen or processed pork products would be eliminated by 2014. Fresh chilled pork could be duty-free 10 years after implementation.
Without implementation of KORUS, the U.S. pork industry stands to lose an export market critical to the success of pork producers. According to Dermott Hayes, Iowa State University economist, by the end of the phase-in period set forth by the Korea free-trade agreement, U.S. pork exports could reach $870 million per year. Current levels are about $215 million per year.
Free-trade agreements also are pending implementation with Colombia and Panama. “We have to push implementation of the FTA’s immediately,” adds Giordono. “If we’re not moving ahead on FTA’s, we are falling behind.”