Pork, soybean & beef groups join Vilsack in seeing Korea FTA as export bonanza
By Jon H. Harsch
© Copyright Agri-Pulse Communications, Inc.
Washington, Dec. 3 - Thanks to U.S. pork producers agreeing to a compromise which delays a zero tariff on most pork products from Jan. 2014 to Jan. 2016, the U.S. and South Korea announced a finalized comprehensive Free Trade Agreement (FTA) Friday. National Pork Producers Council (NPPC) President Sam Carney called the new FTA “still a good deal for us.”
Carney pointed out both that “as the lowest-cost producer of pork in the world, we'll hold our own” and that even with the two year delay, “We still will go to zero six months prior to the EU.”
The FTA which now must go to Congress for ratification and to the South Korean National Assembly would be one of the most lucrative for the U.S. pork industry according to NPPC which has championed the pact for more than three years.
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 - now the top value market for the U.S pork industry. The FTA will lift live hog prices by a staggering $10 per animal and will generate an additional $687 million in U.S. pork exports. 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 U.S.-South Korea FTA is one of three trade deals that are pending approval by Congress. Agreements with Colombia and Panama also have been awaiting action for more than three years.
The American Soybean Association (ASA) also welcomes the new FTA, predicting it will “create landmark opportunities for U.S. soy, meat, and poultry exports.” ASA President Rob Joslin said “Now the Congress needs to approve this agreement as soon as possible.”
The agreement offers immediate duty-free access to U.S. soybeans for crushing and to U.S. soybean meal. And for the first time, producers of U.S. food-grade soybeans would have access to the South Korean market outside of the import monopoly created by the Korean State Trading Enterprise. Tariffs on refined soybean oil would be eliminated over 5 years, and tariffs on crude soybean oil would be eliminated over 10 years.
“Domestic demand for U.S. soybean meal will also increase because this agreement is expected to generate millions of dollars of new meat and poultry exports,” Joslin said. In 2009, South Korea imported $449 million worth of soybeans, soybean meal and soybean oil from the United States. The South Korean market is now the fifth largest for U.S. agricultural exports, valued at $3.9 billion in 2009. According to economic analysis by the American Farm Bureau Federation, the Korea FTA would expand those exports in a wide range of commodities and result in $1.8 billion in additional sales - a 46% increase.
Calling the new FTA “the beef industry's stimulus package,” National Cattlemen's Beef Association (NCBA) Chief Economist Gregg Doud welcomed the FTA deal announced Friday as “one step closer to a working free trade agreement that will create jobs and increase the profitability of America's cattlemen and women.” But he also warned that “We must remember that this is not over. Congress must ratify this agreement and should do so quickly. If Australia beats us to the signing table, they would have a 2.67 percent tariff advantage over U.S. beef for the next 15 years.”
Looking ahead, Doud said that “When this agreement is finally signed, sealed and delivered, it would phase out Korea's 40% tariff on beef imports. We are talking about $325 million in tariff reductions annually once fully implemented.”
Agriculture Secretary Vilsack welcomed the FTA's promise of improved access to more than 49 million Korean consumers and to Korea's $1 trillion economy. He said the new FTA “puts agriculture in a key position to help achieve President Obama's goal of doubling U.S. exports over the next five years.” He explained that “U.S. agricultural exports to South Korea were valued at nearly $5 billion in fiscal year 2010. This agreement will open the market even more for U.S. agriculture.”
Vilsack said that “USDA stands ready to assist U.S. exporters in obtaining immediate and prolonged gains from this agreement. “
Along with a string of other business leaders praising the Korea FTA (KORUS), U.S. Chamber of Commerce President and CEO Thomas J. Donohue said that “This agreement will create thousands of new jobs, advance our national goal of doubling exports in five years, and demonstrate that America is once again ready to lead on trade. The administration has done its part. Now it's time for the new Congress to make passage of KORUS a top priority in January. We will do everything in our power to round up the votes.”
For President Obama's comments on the new U.S.-Korea FTA and for links to White House fact sheets on the deal, go to: www.agri-pulse.com/Obama_completes_South_Korea_FTA_20101203H.asp
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