The Obama administration is on the verge of sending the long-awaited Korea/U.S.—or KORUS-- trade agreement to Congress for final approval and has urged lawmakers to quickly ratify the deal, which is expected to boost U.S. agricultural exports by $1.8 billion annually.
Specific to U.S. pork production, once fully implemented KORUS Free Trade Agreement could add $10 per animal to hog prices, according to Dermott Hayes, Iowa State University agricultural economist or $687 million total. Also, U.S. pork exports to the country are estimated to total 600,000 metric tons. That represents nearly twice the current pork export level sent to Japan, the No. 1 value market for the U.S. pork industry. According to the National Pork Producer’s figures, South Korea could absorb 5 percent of the U.S. annual pork production and create 9,000 direct U.S. pork industry jobs.
In a media conference call last week, USDA Secretary Tom Vilsack stressed the importance of the trade agreement to the overall U.S. economy as it would support least 70,000 new jobs, as well as strengthening long-term ties in the Asia/Pacific region. "Economic output is estimated to grow more under this agreement than from our last nine trade agreements combined," he said. "The U.S.-Korea trade agreement is a win not just for America's farmers and ranchers but for millions of Americans who depend on the farm economy for jobs and wages."
The American Farm Bureau Federation estimates that the KORUS FTA would $1.8 billion in additional U.S. agricultural export sales to the current $5 billion.
He indicated the two countries are still finalizing the translation of the agreement but that negotiations concluded in December set the stage for congressional action, which is where that act now sits. He also warned that delaying the deal would allow foreign competitors, who are finalizing their own trade pacts with South Korea, to take advantage of the lucrative Asian market, potentially costing the United States jobs and export opportunities.
Vilsack noted the European Union recently passed its own agreement with South Korea that goes into effect July 1. He said the administration's goal is to implement the KORUS FTA ahead of that deadline. "My hope for the farm economy, and I believe the president's hope for the overall economy as well, is that Congress moves now to ratify and implement this trade agreement as quickly as possible," he said.
However, some Republican lawmakers say pending trade pacts with Colombia and Panama should also be considered and have threatened to block ratification of the Korean trade deal unless the administration sends all three trade agreements together for congressional approval. The Bush administration negotiated all three trade agreements, but Congress has never approved them.
During a hearing last week before the Senate Finance Committee, Sen. Orrin Hatch (R-Utah), a ranking member of the committee, said he supports the South Korea trade agreement and wants to see it move as soon as possible, but he raised doubts that the president is serious about moving the Colombia and Panama deals. "After two years, it is still an open question whether the president will ever see fit to submit the Colombia and Panama agreements to Congress anytime in the near future, if at all," he said.
Vilsack said President Obama made clear in his State of the Union address about his goal of doubling U.S. exports by 2015 and his commitment to completing all three trade agreements. He said the president has directed U.S. Trade Representative Ron Kirk to "intensify engagements" on the Panama and Colombia deals and to resolve outstanding issues.
"Right now we have before us the U.S./Korea trade agreement that has historic bipartisan support from Democrats and Republicans, as well as from business and labor, from the Chamber of Commerce to the (United Auto Workers union), and it's time to move forward," Hatch said.
Two major sticking points that have stalled the KORUS FTA involve U.S. concerns regarding access to the Asian nation's beef and auto markets. In December, the White House renegotiated the deal to secure more favorable terms for the U.S. auto industry but did not come away with anything different for U.S. beef. The U.S. pork industry, in an effort of compromise and to get the FTA passed, agreed to delay its tariff reductions. Consequently, more than 80 percent of pork exports will be duty-free by 2014, but it will be 15 years before all pork products would reach the zero tariff level. For beef, South Korea's current 40 percent tariff on U.S. beef is expected to be eliminated over 15 years
Once implemented, the KORUS FTA immediately eliminates duties on 60 percent of U.S. farm products exported to Korea, including almonds, pistachios, cherries, cotton, wine, wheat, corn and whey for feed use.
Last year, the United States provided nearly 30 percent of South Korea's total farm imports for a total of nearly $5 billion, making Korea the fifth-largest export market for U.S. farm products, according to USDA.
However, in just over a decade, the U.S. share of the South Korean import market for goods has fallen from 21 percent to 9 percent, Vilsack noted. Even though U.S. exports to the region are growing, the United States' share of the Asian/Pacific import market is falling as Asian countries secure preferential trade agreements that exclude the United States, he said. Across the region, 180 bilateral agreements excluding the United States are in force, with 20 more awaiting implementation and 70 under negotiation.
"That's why we've got to move forward as quickly as possible so that we also generate additional momentum for ratification of other trade deals once completed, which would include Colombia and Panama," Vilsack said.
Source: Ching Lee, Assistant Editor, California Farm Bureau Federation