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FACT
SHEET:
U.S.-Korea Free Trade
Agreement -
Delaware Farmers Will Benefit
September 2008
Printer Friendly Version
The United States concluded free trade negotiations with
Korea on April 1, 2007. The U.S.-Korea Free Trade Agreement (KORUS FTA) is the
most commercially significant free trade agreement the United States has
negotiated in nearly 20 years.
The KORUS FTA provides immediate elimination of duties
on more than 60 percent of current U.S. exports and gives U.S. exporters
improved access to the Korean market for many of the products that have been
highly protected. The U.S. International Trade Commission estimates that annual
U.S. agricultural exports to Korea will increase by a minimum of $1.9 billion
upon full implementation of the agreement.
The agreement eliminates tariffs and other barriers on
most agricultural products, increasing export opportunities for a range of
Delaware’s agricultural products, including poultry, feed grains, and soybeans.
Delaware’s agricultural exports to all countries, estimated at $160 million in
2007, supported about 1,700 jobs, on and off the farm. These export sales make
an important contribution to the Delaware farm economy, which had total cash
receipts of $1 billion in 2007.
Poultry and Egg Products.
The broiler industry accounts for nearly 80 percent of
Delaware’s total farm cash receipts with sales of $734 million in 2007. Poultry
and products are the state’s largest export with overseas sales estimated at $84
million in 2007. Delaware poultry producers and processors will benefit from
this agreement.
- Korea’s tariffs of 18 to 27 percent on frozen leg
quarters, frozen breasts and wings, and frozen turkey cuts, will be phased
out in 7 to 12 years.
- As the number 2 market for U.S. egg products,
Korea’s tariffs of 27 percent on egg products, including egg yolks, will be
phased out in 12 equal annual reductions.
Feed Grains. Corn is
Delaware’s second largest source of cash receipts with sales of $53 million in
2007. Corn growers will benefit from the agreement.
U.S. exports of corn for
feed will be duty-free immediately. Korea is currently the fourth largest
market for U.S. corn for feed.
The FTA includes a new
93,774-ton duty-free quota for corn for processing that grows quickly to
393,849 tons by year 7, after which quantities will be unrestricted.
Soybeans and Products.
With farm cash receipts for soybeans reaching $31 million in 2007, Delaware’s
soybean producers will benefit from this agreement.
The greatest potential
benefit for the soybean sector is likely to come from improved access to
Korea’s 300,000-ton market for food-quality soybeans. Korea has agreed to
immediately eliminate its 5-percent tariff on food-use soybeans.
Korea will establish a
duty-free quota starting at 10,000 tons for identity-preserved soybeans for
food use (the production of soybean curd). This quota will operate outside
the current state trading entity, which has charged a reported $250 per ton
markup on soybean imports supplied to soybean curd processors. (For
comparison, based on trade data, Korea’s average 2006 import price for
soybeans used for food was $330 per ton. This markup brings the price for
imported quality beans to $580.)
Korean tariffs on
imports of crude soybean oil (the majority of Korea’s soybean oil imports)
will decline from the current 5.4-percent tariff over 10 years. Refined oil
tariff rates will decline from the current 5.4 percent in five equal annual
reductions. Korea’s 3-percent tariff on soybean flour and meal will
immediately go to zero.
Dairy. Delaware’s dairy
industry, with cash receipts of $22 million in 2007, will benefit from this
agreement.
The FTA will provide
immediate duty-free access for double the current export volume of total
dairy products. Duty-free quotas will be established for cheese, skim/whole
milk powder, food whey, and butter.
Current annual U.S. feed
whey exports of $8 million will gain duty-free access to the Korean market
immediately upon implementation.
For questions about the U.S.-Korea Free Trade Agreement and its impact on
U.S. agriculture, please contact FAS Legislative and Public Affairs Office at
(202)720-7115 or
LPA@fas.usda.gov.
For detailed information on how the Agreement benefits specific commodities,
please visit:
http://www.fas.usda.gov/info/factsheets/Korea/us-koreaftafactsheets.asp.
Back to the
U.S.–Korea Free Trade
Agreement
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