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FACT
SHEET:
U.S.-Korea Free Trade
Agreement -
Kansas 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 Kansas’ agricultural
products, including beef, pork, wheat, and feed grains. Kansas’ agricultural
exports to all countries, estimated at $3.8 billion in 2007, supported 40,496
jobs, on and off the farm. These export sales make an important
contribution to the Kansas farm economy, which had total cash receipts of $11.7
billion in 2007.
Beef. Kansas’ cattle and calf industry accounts for 54 percent of the
state’s farm cash receipts and generated earnings of $6.3 billion in 2007.
Kansas is also the nation’s third largest exporter of live animals and meat.
This 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.
Wheat. Kansas is the nation’s top wheat grower and second largest exporter. Farm cash
receipts were $1.5 billion and exports were estimated at more than $1 billion
in 2007.
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.
Feed Grains. Kansas is the nation’s sixth largest exporter of feed
grains. In 2007, corn was the state’s third largest source of farm cash receipts
at $1.4 billion.
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. Soybeans are the fourth leading source of farm
cash receipts at $697 million in 2007, and Kansas 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.
Pork. Kansas hog farmers, with cash receipts of $406 million in 2007,
will benefit from the 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.
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.
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U.S.–Korea Free Trade
Agreement
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