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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 Utah’s agricultural
products, including beef, dairy, and pork. Utah’s agricultural exports to all
countries, estimated at $304 million in 2006, supported about 3,600
jobs, on and off the farm. These export sales make an important
contribution to the Utah farm economy, which had total cash receipts of $1.2
billion in 2006.
Beef. The state’s largest agricultural industry, cash receipts from
cattle and calf operations totaled $413 million in 2006, or 33 percent of the
state’s agricultural total. The industry will benefit from this FTA.
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.
Dairy. The second largest source of state farm cash receipts with
earnings of $218 million in 2006, the Utah 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. Utah’s hog industry is the state’s third largest source of farm
cash receipts and the industry will benefit from this FTA.
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 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 miscellaneous fresh cuts starts
growing at 8,250 tons, nearly double current trade volume.
Wheat. Wheat and wheat products are Utah’s largest agricultural export
with estimated export sales of $116 million in 2007. Wheat growers will benefit
from this agreement.
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.
Although this tariff differential may be
small, it provides a small tariff advantage when competing against Canada
and Australia.
Animal Hides and Skins. Utah is the nation’s seventh largest exporter of
animal hides and skins with exports of $81 million in 2007. The cattle industry
and tanneries will benefit from this agreement.
U.S. exports of all animal hides and skins,
including fur skins, will receive immediate duty-free access upon
implementation. Korea is the United States’ second largest market for cattle
hides and the third largest market for mink fur skins.
