Trade issues between the United States and South Korea on issues related to trade in beef and automobiles seems to be no closer to a resolution, following President Obama’s recent trip. National Pork Producers Council is disappointment as an agreement would pave the way to complete the U.S./South Korea Free-trade Agreement.
U.S. and South Korea trade negotiators had hoped to resolve the outstanding issues before the conclusion of the G-20 economic meeting in Seoul, South Korea held earlier this week. The U.S./South Korea FTA was signed on June 30, 2007, but must be approved by the U.S. Congress as well as the South Korean National Assembly.
This particular FTA would be among the more lucrative for the U.S. pork industry, according to NPPC. The council is urging resolution of the outstanding issues so that congressional lawmakers can approve the trade deal as soon as possible.
“America’s pork producers and all of U.S. agriculture need the two sides to reach agreement quickly on the remaining issues so that Congress can act soon to pass the U.S./South Korea Free-trade Agreement,” says Sam Carney, NPPC president and Iowa pork producer. “This would be the biggest trade agreement ever for the U.S. pork industry. It would be good for agriculture, good for business and good for the U.S. economy. If the two sides don’t act quickly, I am very concerned that the FTA will be overtaken by the presidential election cycle.”
According to Iowa State University Economist Dermot Hayes, by the end of the FTA’s 10-year phase-in period, total U.S. pork exports to South Korea will be almost 600,000 metric tons. That represents nearly twice the current U.S. export level to Japan, which is now the top value market for the U.S pork industry. The FTA will add $10 per animal to live-hog prices and will generate an additional $687 million in U.S. pork exports, Hayes notes. South Korea alone will absorb 5 percent of total U.S. pork production, and the FTA will create more than 9,000 new direct jobs in the U.S. pork industry.
The South Korean market is the fifth largest for U.S. agricultural exports, valued at $3.9 billion in 2009. According to an economic analysis by the American Farm Bureau Federation, the U.S./South Korea FTA would expand exports in a wide range of commodities and result in $1.8 billion in additional agricultural sales-- a 46 percent increase over last year.
“The export opportunities the FTA offers U.S. pork producers and many other agricultural products in the Korean market are truly remarkable,” Carney says. “The agreement would help American farmers who depend on export markets for a major share of their income and who have been growing fearful that agreements between South Korea and some of our competitors could leave us worse off than we are now.”
South Korea has in place or is negotiating 13 other trade agreements, covering some 50 countries, many of which compete with the United States in food and agricultural products. Consequently, Hayes projects that, without a U.S./South Korea FTA, the U.S. pork
industry will be excluded from the Asian market in 10 years.
“We can’t let that happen,” Carney says. “Our livelihoods and U.S. jobs depend on trade and on maintaining and expanding markets. The Obama administration needs to resolve the outstanding issues in the FTA, then lawmakers need to approve the deal as soon as possible.”
Commodities that will gain immediate duty-free access to the South Korean market on implementation of the FTA include wheat, feed corn, soybeans for crushing, hides and skins, cotton and a broad range of high-value agricultural products. These include almonds, pistachios, wine, bourbon and Tennessee whiskey, raisins, grape juice, orange juice, fresh cherries, frozen French fries, frozen orange juice concentrate, corn gluten feed and meal and pet food.
Several commodities will gain free access two years after implementation, including avocados, lemons, dried prunes and sunflower seeds, or five years, including food preparations, chocolate and chocolate confectionary, sweet corn, sauces and preparations, corn sweeteners, corn oil, other fodder and forage (alfalfa), breads and pastry, grapefruit and dried mushrooms.
Other U.S. farm products will benefit from expanded market access opportunities through new or bigger tariff rate quotas. These include skim and whole milk powder, whey for food use, cheese, starches-- including high-value modified corn starches-- barley, popcorn and soybeans for food use. Market access improvements will also be seen for beef products, pears, apples, grapes and oranges.
The U.S./South Korea FTA is one of three trade deals that are pending congressional approval. Agreements with Colombia and Panama also have been awaiting action for more than three years. NPPC has been calling for action on all three FTAs for years, pointing out the enormous risk of letting other countries move forward first.