Korean Ambassador expresses optimism about new trade agreement

Han said timing was important to ensure that other countries don’t shut U.S. products out. For example, he said “American wines face a 15% tariff in Korea and it will drop to zero immediately when the FTA takes effect. This is important to American wine-makers because Korea and the European Union have finalized a free trade agreement that will take effect this July.

“The EU is, of course, a major producer and exporter of fine wines. If the Korea-EU FTA takes effect and the KORUS FTA does not, American wines will cost 15 percent more in Korea than comparable European wines. That would all but shut them out of the market.”

The governments of Korea and the United States concluded negotiations on the Korea-US Free Trade Agreement in April 2007, after 14 months of negotiations and signed it in June, 2007. Trade officials from both sides held a series of meetings in Seoul and in Maryland late last year to resolve outstanding concerns about the FTA. Those concerns centered on trade in automobiles. They reached a final, “supplemental” agreement on December 3.

The ambassador said all U.S. industries will benefit from passage of the U.S.-Korea Free Trade Agreement, but American agriculture has the most to gain. “That’s because America’s farmers and ranchers are the most productive, the most efficient and the most profitable in the world,” he said.

According to the American Meat Institute, passage of the KORUS FTA will increase beef, pork and poultry exports to Korea by $2.1 billion after full implementation and will create more than 27,000 jobs in those three sectors alone.

The agreement will bring this about by erasing 60% of Korea’s import tariffs on U.S. farm products as soon as it takes effect. These include wheat, corn, soybeans for crushing, cotton, cherries, almonds, wine and others.

Other farm products that will gain immediate duty-free access within new tariff-rate quotas include cheese, popcorn, soybeans for food use, potatoes, honey, and hay.

Han said the agreement will ensure that U.S. poultry producers will be able to maintain their dominance in the Korean market for many years. “Korea’s leading poultry import is frozen chicken legs and wings, and about two-thirds of them come from the U.S. Under the agreement, Korea’s 20% poultry tariff will be phased out over 10 years for legs and 12 years for breasts and wings.”

As for pork, Korea’s tariff of 25% on most varieties will go to zero on January 1, 2016. A study by an Iowa State University economist found that the FTA will raise hog prices by $10 per animal, increase pork exports by $687 million, and create 9,000 jobs in and around the pork industry. The United States is the largest exporter of pork to Korea. The KORUS FTA will help it keep that distinction.

Beef issues are still problematic.

“I don’t need to tell you what a troublesome issue the US-Korea beef trade has been over the last several years,” he explained. “As you know, Korea stopped accepting U.S. beef imports in December 2003 after mad cow disease was discovered here.The market was re-opened in 2006 and American imports started to bounce back; they totaled 233 metric tons in 2006 and 70,000 metric tons in the first three quarters of 2010. That sounds impressive until you consider that Korea imported 247,000 metric tons from the U.S. in 2003.”

“Without the KORUS FTA, beef exports may never get back to their pre-mad cow level of 247,000 metric tons,” he emphasized. “They face a 40 percent tariff in Korea and the FTA will phase it out over 15 years.”

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