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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 North Dakota’s
agricultural products. North Dakota’s agricultural exports to all countries,
estimated at $1.9 billion in 2006, supported about 22,300
jobs, on and off the farm. These export sales make an important
contribution to the North Dakota farm economy, which had total cash receipts of
$4 billion in 2006.
Wheat and Barley. Wheat is the largest source of farm cash receipts for
the state with sales of $1.1 billion in 2006, or 27 percent of the state's
total.
An unlimited amount of U.S. wheat for milling
can enter Korea duty free upon implementation of the agreement.
Korea’s imports of U.S. wheat will no longer
be subject to Korea’s 1.8-percent tariff or its autonomous tariff-rate quota
(TRQ) of 1 percent.
A new 2,500-ton duty-free quota established
for unhulled and naked barley that will give the United States a tariff
advantage over competitors such as Australia and China.
A new 9,000-ton duty-free quota established
for unroasted malt and/or malting barley provides the United States with 10-
and 20-percent tariff advantages, respectively, over our competitors.
Beef. The cattle and calf industry generated cash receipts of $726
million in 2006, the second largest source of farm earnings in the state. The
industry will benefit from this agreement.
For beef muscle meats, the FTA provides a
15-year straight-line tariff phase out with a safeguard that begins growing
from 270,000 tons, a quantity that is 17 percent larger than our largest
historical shipments.
Technical consultations continue toward the
goal of allowing imports to take place consistent with World Organization
for Animal Health (OIE) guidelines.
Following the May 2007 decision by the OIE
classifying the United States as a controlled-risk country, Korea has
announced that it will undertake in a timely manner its regulatory process
toward expansion of market access for beef and beef products.
Soybeans and Products. North Dakota is the nation’s ninth largest
exporter of soybeans and products, and soybeans are the state’s second largest
agricultural export.
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.
Feed Grains. Corn accounts for the fourth largest source of farm cash
receipts with sales of $270 million in 2006. North Dakota’s feed grain producers
will benefit from this agreement.
U.S. exports of corn for feed will enter 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.
Vegetables and Pulses. North Dakota exported an estimated $240 million in
fresh and processed vegetables in 2007 and growers can benefit from this FTA.
A new 3,000-ton duty-free quota for fresh
potatoes and a new 5,000-ton duty-free quota for dehydrated potatoes will
bring opportunities for growers.
Tariffs for flaxseed, canola, and sunflower
seed oil will be phased out over 5-10 years.
The current 27-percent tariff on most pulses
(peas, beans, and other legumes) will be eliminated within 5 years and the
tariff for lentils will be removed within 10 years.
