U.S. pork producers will receive an additional $10 per pig once the U.S./South Korea Free-Trade Agreement is fully implemented, according to the National Pork Producers Council.
The trade pact is awaiting a vote by the U.S. Congress, as well as approval from the National Assembly of the Republic of Korea also must approve the pact.
“This is the single most important trade agreement ever for the U.S. pork industry, and it will generate hundreds of millions of dollars in new export sales,” says Jill Appell, NPPC president. “U.S. pork producers will aggressively work for congressional passage of the U.S./South Korea trade agreement.”
In South Korea pork constitutes 44 percent of daily meat protein consumption. It already is the fourth largest market for U.S. pork and pork products. According to Iowa State University economist Dermot Hayes, by the end of the FTA phase-in period, total U.S. pork exports to the Asian nation will rise to nearly 600,000 metric tons. That’s about twice as much as the amount currently shipped to Japan, U.S. pork's current No. 1 export market. Hayes also estimates that the agreement will increase U.S. live hog prices by $10. By the end of the phase in period, Hayes forecasts South Korea to absorb 5 percent of total U.S. pork production
Under terms of the deal, tariffs will be eliminated on all frozen and processed pork products by 2014. Fresh chilled pork will be duty-free 10 years after implementation, with a safeguard. U.S. pork products currently face significant tariffs in South Korea. For example, most frozen U.S. pork exports are assessed a 25 percent tariff, and most fresh chilled products are assessed a 22.5 percent tariff.
In addition to ambitious market-access gains, the Republic of Korea has agreed to accept all pork and pork products from USDA-approved packing facilities.
“Prompt congressional passage and implementation of this agreement is absolutely critical to pork producers, who are facing rising feed costs because of U.S. renewable fuel policy,” says Appell. “Exports contribute significantly to producer profitability, so it is important to continue expanding sales opportunities through trade agreements.”
It's worth noting that the United States has never had preferential duty-free access to a heavily populated Asian country before, making this trade pact a monumental opportunity for the U.S. pork industry. The United States currently has a 27 percent share of the total South Korean import market, followed by Canada at 20 percent, Chile at 10 percent and European countries at 40 percent. The United States dominates the chilled market with a 70 percent share. Canada is next with 26 percent, Australia has a 2 percent share and Chile has a 1 percent share.