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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 Arkansas’ agricultural
products, including poultry, soybean products, and cotton. Arkansas’s
agricultural exports to all countries, estimated at $1.9 billion in 2006,
supported about 22,644 jobs, on and off the farm.
These export sales make an important contribution to the Arkansas farm economy,
which had total cash receipts of $6.2 billion in 2006.
Poultry and Egg Products. With cash receipts of $2.3 billion in 2006,
broilers are Arkansas’ leading agricultural industry, accounting for 38 percent
of the total farm earnings. Arkansas is the nation’s leading broiler exporter,
and poultry and poultry products are the state’s top agricultural export. The
Arkansas poultry industry will benefit from this agreement.
Korea’s tariffs of 18 to 27 percent on frozen leg quarters, frozen
breasts and wings, and frozen turkey cuts, will be phased out in 7 to 12
years.
As the number 2 market for U.S. egg products, Korea’s tariffs of 27
percent on egg products, including egg yolks, will be phased out in 12 equal
annual reductions.
Soybeans and Products. With the fourth largest source of farm cash
receipts in the state, Arkansas soybean farmers will benefit from this
agreement.
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.
Cotton. The cotton industry is the state’s third largest agricultural
industry with cash receipts of $642 million or 10 percent of farm earnings in
2006.
The FTA will lock in the duty-free access being enjoyed by U.S. cotton
exporters. This permanent access allows U.S. cotton exports to continue to
compete on a level playing field with Korea’s other trading partners.
Beef. With cash receipts of $535 million in 2006, Arkansas’s cattle and
calf industry will benefit from this agreement.
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.
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
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