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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 Oklahoma’s agricultural
products, including beef, pork, and poultry. Oklahoma’s agricultural exports to
all countries, estimated at $754 million in 2006, supported about 8,900
jobs, on and off the farm. These export sales make an important
contribution to the Oklahoma farm economy, which had total cash receipts of $5.1
billion in 2006.
Beef. The cattle and calf industry generated $2.8 billion in farm cash
receipts in 2006, or about half of the state’s total. This industry will benefit
from this FTA.
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.
Pork. The pork industry is the state’s second largest source of farm cash
receipts that totaled $566 million in 2006. This industry will benefit from this
agreement.
Korea’s tariffs on imports of more than 90
percent of U.S. pork products will become duty free on January 1, 2014. This
includes all frozen and processed pork products.
Date-certain duty-free access allows for U.S.
exports to compete on a level playing field with other Korean free trading
partners.
A transparent first-come first-serve
safeguard quota for fresh pork bellies and miscellaneous fresh cuts starts
growing at 8,250 tons, nearly double current trade volume.
Poultry and Egg Products. Broilers are the state’s third largest source
of farm cash receipts and totaled $498 million in 2006. The poultry and egg
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.
Wheat. As the nation’s fourth largest exporter of wheat and wheat
products with overseas sales estimated at $300 million in 2006, Oklahoma wheat
producers will benefit from this agreement.
An unlimited amount of U.S. wheat for milling
can enter Korea duty free upon implementation of the agreement.
Korea’s imports of U.S. wheat will no longer
be subject to Korea’s 1.8-percent tariff or its autonomous tariff-rate quota
(TRQ) of 1 percent.
Although this tariff differential may be
small, it provides a small tariff advantage when competing against Canada
and Australia.
Dairy. Oklahoma’s dairy industry is the state’s fifth largest source of
farm cash receipts and totaled $178 million in 2006. Dairy producers will
benefit from this agreement.
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.
