Beside China and Japan, third-place beef importer South Korea got relatively little attention during the USMEF press call. Korea is the fastest-growing major markets for U.S. beef in the past years, however.
Year-to-date through August (most recent complete data), South Korea has increased its U.S. beef import volume by 8 percent. The value of those imports has grown 19 percent in that time. In 2016 compared to 2015, South Korea’s U.S. beef import volume rose 42 percent and the value rose 31 percent. The 2016 trade data is particularly important since high prices and a strong U.S. dollar made many other countries back off on their imports of U.S. beef.
The Trump administration and the South Korean government agreed to renegotiate the Korean Free Trade Agreement (KORUS) in early October. When asked how this process is going, Joel Haggard—USMEF senior vice president, Asia Pacific—said he was unaware of any developments.
Haggard had much to say about potential impacts, however. He explained that the U.S. signed one of the earliest free trade agreements (FTAs) with South Korea, giving the U.S. a slight tariff advantage over competitors. The U.S. has a roughly 5 percent tariff advantage over Australia, for instance.
“To the extent that any renegotiation will result in those tariffs going back up, that would hit us almost instantly. I think the impact would be significant, in the hundreds of millions of dollars,” Haggard estimated.
Given how recent KORUS is, tariff rates are still being phased out for all free trade agreement countries. The U.S. still pays a 24 percent tariff on the beef it exports to South Korea. That is down from 40 percent via the phase out included in KORUS.
“If we lost those reductions and went back, it’s not as though everybody would go back to 40 percent,” clarified USMEF CEO Phil Seng.
“The Australians, Canadians, New Zealanders—all of their beef is currently going in at well under 40 percent. Not as low as ours, but it wouldn’t be back to the pre-FTA days. It would be a situation where we would be at a huge disadvantage.” — WLJ
