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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 New Jersey’s
agricultural products, including fruits, dairy products, and vegetables. New
Jersey’s agricultural exports to all countries, estimated at $219 million in
2006, supported about 2,600 jobs, on and off the farm.
These export sales make an important contribution to the New Jersey farm
economy, which had total cash receipts of $924 million in 2006.
Fruits. New Jersey blueberry and peach growers together generated $120
million in farm cash receipts in 2006, and the state’s fresh and processed fruit
shipments overseas were estimated at $24 million that same year. Fruit growers
will benefit from this FTA.
The 45-percent tariffs on blueberries,
cranberries, and peaches will be phased out over 10 years.
Dairy. Farm cash receipts from the dairy industry totaled $23 million in
2006. New Jersey dairy farmers will benefit from this FTA.
The FTA will provide immediate duty-free
access for double the current export volume of total dairy products.
Duty-free quotas will be established for cheese, skim/whole milk powder,
food whey, and butter.
Current annual U.S. feed whey exports of $8
million will gain duty-free access to the Korean market immediately upon
implementation.
Vegetables. New Jersey vegetable growers generated cash receipts of $70
million dollars in 2006, and the state’s fresh and processed vegetable shipments
overseas were estimated at $17 million that same year. Vegetable growers will
benefit from this FTA.
Tariffs on canned and processed tomatoes, and
fresh cucumbers will become duty free immediately.
Soybeans and Products. New Jersey soybean producers, with cash receipts
of $16 million in 2006, 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.
