NPPC urges resolution of issues related to U.S.-South Korea FTA

16-11-2010 | Home | News

The National Pork Producers Council expressed disappointment that a final deal has not been reached between the United States and South Korea on issues related to trade in beef and automobiles. An agreement would have paved the way for the U.S.-South Korea Free Trade Agreement to be completed.

The two sides had hoped to resolve the outstanding issues before the conclusion of the© G-20 economic meeting in Seoul, South Korea, which was held this week. The U.S.-South Korea FTA was signed on June 30, 2007. The FTA must be approved by the U.S.Congress as well as the South Korean National Assembly.

Lucrative for pork industry
The FTA would be one of the most lucrative for the U.S. pork industry, according to NPPC, which has championed the pact for more than three years now. The organization is urging resolution of the outstanding issues so that congressional lawmakers can approve the trade deal as soon as possible.

“America’s pork producers and all of U.S. agriculture need the two sides to reach agreement quickly on the remaining issues so that Congress can act soon to pass the U.S.-South Korea Free Trade Agreement,” said NPPC President Sam Carney, a pork producer from Adair, Iowa. “This would be the biggest trade agreement ever for the U.S. pork industry. It would be good for agriculture, good for business and good for the U.S. economy. If the two sides don’t act quickly, I am very concerned that the FTA will be overtaken by the presidential election cycle.”

Pork exports/ lift hog prices

According to Iowa State University economist Dermot Hayes, by the end of the FTA’s 10-year phase-in period, total U.S. pork exports to South Korea will be almost 600,000 metric tons. That represents nearly twice the current U.S. export level to Japan – now the top value market for the U.S pork industry. The FTA will lift live hog prices by a staggering $10 per animal and will generate an additional $687 million in U.S. pork exports. South Korea alone will absorb 5 percent of total U.S. pork production, and the FTA will create more than 9,000 new direct jobs in the U.S. pork industry.

The South Korean market is now the fifth largest for U.S. agricultural exports, valued at $3.9 billion in 2009. According to an economic analysis by the American Farm Bureau Federation, the U.S.-South Korea FTA would expand exports in a wide range of commodities and result in $1.8 billion in additional agricultural sales – a 46 percent increase over last year.

“The export opportunities the FTA offers U.S. producers of pork and many other agricultural products in the Korean market are truly remarkable,” said Carney. “The agreement would help American farmers who depend on export markets for a major share of their income and who have been growing fearful that agreements between South Korea and some of our competitors could leave us worse off than we are now.”

South Korea has in place or is negotiating 13 other trade agreements, covering some 50 countries, many of which are competitors of the United States in food and agricultural products. Because of those, Iowa State’s Hayes has projected that, without a U.S.-South Korea FTA, the U.S. pork industry will be out of the Asian market in 10 years.

“We can’t let that happen,” Carney said. “Our livelihoods and U.S. jobs depend on trade and on maintaining and expanding markets. The Obama administration needs to resolve the outstanding issues in the FTA, then lawmakers need to approve the deal as soon as possible.”

Commodities that will gain immediate duty-free access to the South Korean market on implementation of the FTA include wheat, feed corn, soybeans for crushing, hides and skins, cotton and a broad range of high-value agricultural products. These include almonds, pistachios, wine, bourbon and Tennessee whiskey, raisins, grape juice, orange juice, fresh cherries, frozen French fries, frozen orange juice concentrate, corn gluten feed and meal and pet food.

A number of commodities will gain free access two years after implementation, including avocados, lemons, dried prunes and sunflower seeds, or five years, including food preparations, chocolate and chocolate confectionary, sweet corn, sauces and preparations, corn sweeteners, corn oil, other fodder and forage (alfalfa), breads and pastry, grapefruit and dried mushrooms.

Other U.S. farm products will benefit from expanded market access opportunities through new or bigger tariff rate quotas. These include skim and whole milk powder, whey for food use, cheese, starches – including high-value modified corn starches – barley, popcorn and soybeans for food use. Market access improvements will also be seen for beef products, pears, apples, grapes and oranges.

The U.S.-South Korea FTA is one of three trade deals that are pending approval by Congress. Agreements with Colombia and Panama also have been awaiting action for more than three years. NPPC has been calling for action on all three FTAs for years, pointing out the enormous risk of letting other countries move forward first.©