Good news for beef exports to Korea! Tariffs have fallen from 40 percent to 21.3 percent and will continue to decline each year until eliminated by 2026.
The tariff reduction comes as President Donald Trump and President Moon Jae-in of the Republic of Korea signed a renegotiated free trade agreement (FTA) between their respective countries on Sept. 24.
The U.S.-Korea free trade agreement (KORUS) was first signed in 2012. According to a fact sheet from the Office of the U.S. Trade Representative (USTR), the U.S. trade deficit in goods with Korea increased by 75 percent from 13.2 billion to 23.1 billion (2017), while the overall deficit increased by 57 percent from $6.5 billion to $9.8 billion (2017) since KORUS went into effect.
The USTR said, “President Trump continues to fulfill one of his key promises to the American people: to secure free, fair and reciprocal trade deals for the American worker.”
While many of the provisions of the renegotiated KORUS impact the automobile and other manufacturing industries, the agreement is welcome news for America’s cattle producers given the reduction of tariffs for product going into Korea.
National Cattlemen’s Beef Association (NCBA) President Kevin Kester issued a statement following the signing saying, “KORUS is a prime example of how U.S. producers benefit from trade agreements that reduce tariffs and implement science-based standards. Less than a decade ago, U.S. beef exports to South Korea were severely limited by a 40 percent tariff and a host of non-tariff trade barriers. KORUS tore down those barriers, helping turn South Korea into a leading destination for U.S. beef.”
Kester went on, “In fact, exports to South Korea accounted for over $1 billion annually over the last two years. We applaud President Trump for his leadership in improving KORUS for other sectors and we know that a modernized KORUS agreement will allow U.S. producers to continue focusing on what we do best: Providing safe, high-quality beef for Korean families to enjoy.”
USDA Secretary Sonny Perdue also gave a nod to the revised agreement saying, “We are entering into a new KORUS agreement that is a better deal for the entire United States economy, including the agricultural sector. This represents an important improvement in trade relations between our two nations, building on long-standing cooperation we have enjoyed. This agreement adds to the momentum building for President Trump’s approach to trade, which is to stand strong for America’s interests and strike better deals. I am optimistic that the dominoes will continue to fall: KORUS, then a new NAFTA, and new agreements with the European Union, Japan, and, most notably, China. As an avid sportsman, I would say ‘put this one in the bag and keep hunting for more.’”
Explaining the implications to the beef sector, the U.S. Meat Export Federation (USMEF) President and CEO Dan Halstrom said the revised KORUS agreement is reassuring for the U.S. beef and pork industries.
“The market access terms secured in the original KORUS not only helped increase U.S. red meat’s market share in South Korea, but also bolstered consumption by making our beef and pork products more affordable and accessible to Korean consumers.”
USMEF noted that U.S. is the largest supplier of beef to Korea and trails only the European Union as the second-largest pork supplier. U.S. red meat exports to Korea set a record last year of $1.7 billion, up 19 percent year-over-year and up 69 percent from 2012, when KORUS went into force. This trend continues in 2018, with both U.S. beef and pork export value increasing more than 50 percent compared to a year ago. Korea is now the second-largest value market for U.S. beef (after Japan) and fourth-largest for U.S. pork (after Japan, Mexico and China/Hong Kong).
Halstrom also said “All major red meat competitors also now have free trade agreements with Korea, but the U.S. has benefited from KORUS being implemented earlier than most of these FTAs, providing the U.S. with a head start on tariff elimination. USMEF thanks our U.S. trade officials for recognizing the importance of the favorable terms included in KORUS, and maintaining them in the revised agreement.”
NCBA Director of International Trade and Market Access, Kent Bacus told WLJ the new agreement does not have a renegotiation clause common in many trade agreements. He said, “After 2026 the tariffs will remain at that level [0 percent], not snapback. Having KORUS in place just provides certainty that the current deal we have will be in place, and hopefully we can keep growing the South Korean market.”
In a joint statement after the signing, Trump and Moon wrote, “We welcome the successful conclusion of negotiations between our governments that have resulted in amendments and modifications to improve the Unites States-Korea Free Trade Agreement.
“With today’s signing of our newly concluded agreement, we pledge to direct our officials to move forward with additional steps, as required in our respective countries, to bring the updated agreement into force as soon as practicable.
“We furthermore welcome this achievement as tangible evidence of the strength of the relationship between our two countries.
In its fact sheet the USTR also noted, “The Republic of Korea is an important ally and key trading partner. Improving U.S. Korea trade by rebalancing our trade and reducing trade deficit will strengthen our economic and national security relationship.” — Rae Price, WLJ editor
