|
|
|
FACT
SHEET:
U.S.-Korea Free Trade
Agreement -
Wisconsin 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 Wisconsin’s
agricultural products, including dairy and beef. Wisconsin’s agricultural
exports to all countries, estimated at $1.5 billion in 2006, supported about
17,763 jobs, on and off the farm. These export sales
make an important contribution to the Wisconsin farm economy, which had total
cash receipts of $6.8 billion in 2006.
Dairy. Wisconsin’s dairy industry is the nation’s largest
exporter, and with cash receipts of $3.1 billion or 45 percent of farm earnings
in 2006, it is by far the state’s largest agricultural industry. The dairy
industry will benefit from this FTA.
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.
Beef. Wisconsin’s cattle and calf industry accounted for cash receipts
of $937 million in 2006 and 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.
Feed Grains. Corn is the third largest source of state farm cash
receipts with sales of $789 million in 2006. The state is the nation’s 11th
largest exporter of feed grains and products.
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.
Soybeans and Products. In 2006, Wisconsin’s soybean growers earned
$275 million, and this industry was the state’s fourth largest source of farm
revenue.
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.
Vegetables and Pulses. As a large greenhouse/nursery producer, Wisconsin vegetable producers will benefit from this
agreement.
Tariffs on frozen potato fries and chipping potatoes (during the U.S.
potato shipping season) will become duty free immediately.
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.
Other products such as carrots, lettuce, dried mushrooms, and sweet
corn, with duties ranging from 30 to 45 percent, will have tariffs phased
out in either 5 or 10 years.
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
|
|
|
