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 Ohio’s agricultural
products, including soybeans, corn, and dairy. Ohio’s exports to all countries,
estimated at $1.7 billion in 2006, supported about 22,000 jobs, both on and off
the farm. These export sales make an important contribution to Ohio’s farm
economy, which had total cash receipts of $5.5 billion in 2006.
Soybeans and Products. Soybeans are Ohio’s largest source of farm cash
receipts, amounting to $1.2 billion in 2006, or 21 percent of the state’s total.
As the fifth largest exporter of soybeans and products in the nation, Ohio
soybean producers will benefit from this FTA.
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 is the state’s second largest source of farm cash
receipts with sales valued at $987 million in 2006, and Ohio is the ninth
ranked exporter of feed grains and products nationwide. Feed grain producers
will benefit from the agreement.
U.S. exports of corn for feed are guaranteed to enter at zero duty
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.
Dairy Products. Providing the state’s third leading source of state farm
cash receipts with sales of $667 million in 2006, Ohio’s dairy industry 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.
Pork. Accounting for cash receipts of $395 million in 2006, Ohio’s hog
farmers will benefit from this agreement.
Korea’s tariffs on imports of more than 90 percent of U.S. pork products
will become duty free on January 1, 2014. This includes all frozen pork
products and processed pork products.
Date-certain duty-free access allows for U.S. exports to compete on a
level playing field with other Korean free trading partners.
A transparent first-come first-serve safeguard quota for fresh pork
bellies and other miscellaneous fresh cuts starts growing at 8,250 tons,
nearly twice the current trade volume.
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
