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| Horticultural & Tropical Products Division | Return to the H&TP Home Page |
January 18, 2002
Korea’s Plan for 2002 Orange Imports Expected to Lead to Unfilled Quota
According to reports from FAS/Seoul, the Cheju Citrus Grower’s Agricultural Cooperative (CCGAC) has decided it will use quota auctions to administer the calendar year 2002 Minimum Market Access (MMA) quota for oranges, with the first auction expected some time in March. This will be after the peak marketing season for Korea’s domestic orange production and will mean higher prices for the imported product, since supplies of California’s navels are down this year. If, as expected, the CCGAC falls short of filling the 2002 MMA quota, this would mark the fourth year in a row that Korea has failed to import the quantities specified under the Uruguay Round agreement. Under Korea’s import regime, oranges may enter within the quota with a tariff of 50 percent, or outside the quota (as of July 1997) at a 2002 duty rate of 59.8 percent. The out-of-quota duty is being phased down and will reach the in-quota rate of 50 percent in 2004, effectively terminating the quota regime. As the out-of-quota duties have approached the in-quota duties, U.S. orange exports to Korea out-of-quota have jumped sharply, exceeding the in-quota volumes for each of the past two years. The merging of the duty rates has also made it more difficult for the CCGAC to capture the dwindling quota rents, eroding the organization’s competitiveness in the market and greatly reducing its incentive to purchase the import quantities specified under the MMA quota schedule. Korea has emerged as a leading market for U.S. oranges, with exports through the first 10 months of 2001 totaling nearly $50 million. Trade sources in the United States and Korea would like to see the quota amounts for the last two years of the MMA regime distributed to commercial importers, thereby increasing the likelihood that the full trade benefits of the system are realized.
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