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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
Texas’ agricultural products, including beef, poultry, and dairy. Texas exports
to all countries, estimated at $3.8 billion in 2006, supported about 48,700
jobs, both on and off the farm. These export sales make an important
contribution to Texas’ farm economy, which had total cash receipts of $16
billion in 2006.
Beef. The cattle and calf industry is the state’s
largest agricultural industry with cash receipts of $7.4 billion or 46 percent
of farm earnings in 2006. Texas is the nation’s fourth largest exporter of live
animals and meat. The cattle 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.
Poultry Meat. Broilers are the fourth largest
source of farm cash receipts with sales of $1.3 billion in 2006. Texas is the
nation’s sixth largest exporter of poultry meat and products, and Texas poultry
producers and processors will gain 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 two market for U.S. egg products,
Korean tariffs of 27 percent on egg products, including egg yolks, will be
phased out in 12 equal annual reductions.
Dairy Products. Dairy products are the fifth
largest source of farm cash receipts in Texas with $947 million in 2006. The
Texas dairy industry will benefit from the Korea 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.
Cotton. The cotton industry is the state’s second
largest agricultural industry with cash receipts of $1.9 billion, or 12 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.
Fruits, Vegetables, and Products. Fruits and
vegetables and related products are an important part of Texas agricultural
exports, accounting for an estimated $126 million in 2006.
Tariffs on frozen orange juice, asparagus, canned
and processed tomatoes, frozen potato fries, and chipping potatoes (during
the U.S. potato shipping season) will become duty free immediately.
Many other products such as avocados, lemons,
grapefruit, carrots, lettuce, dried mushrooms, and sweet corn will see
duties ranging from 30 to 45 percent eliminated in 2 to 10 years.
For oranges, the FTA establishes front-loaded
seasonal (March-August) tariff cuts that benefit 70 percent of exports
through an immediate reduction from 50 to 30 percent and a 7-year phase out.
Access for shipments earlier in the year is provided through a duty-free
quota.
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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