Compiled by Kevin Schulz
U.S. Trade Representative Robert Lighthizer and Republic of Korea Minister for Trade Hyun Chong Kim announce that the United States and the Republic of Korea have reached an agreement in principle on the general terms of amendments and modifications to the U.S.-Republic of Korea Free Trade Agreement.
The nations have also agreed on terms for a country exemption for the Republic of Korea from tariffs imposed on steel imports under Section 232 of the Trade Expansion Act of 1962 pursuant to Presidential Proclamation 9705, as amended.
At the instruction of the Ministers, negotiators are finalizing the terms of the KORUS FTA negotiations, which are subject to domestic procedures in both nations before provisions can be brought into force. The revised agreement addresses issues related to investment, tariffs, trade in automobiles and trade remedies. Additional progress was made in the areas of pharmaceuticals, customs and textiles to smoothly implement the KORUS FTA.
The arrangement with respect to steel imports is expected to take effect on May 1.
This represents important progress in improving U.S.-Korea trade and economic relations, based on their strong and enduring security relationship.
In a CNBC article, Lighthizer says the trade progress between the two countries reforms three separate areas: steel, currency and KORUS itself. South Korea has agreed to cut annual steel exports to the United States by 30%, and South Korea will be subject to a 10% tariff on aluminum.
But what does this mean for the U.S. meat industry, and the country’s pork producers?
Dan Halstrom, president and CEO of the U.S. Meat Export Federation, issued a statement in light of the KORUS announcement.
“The announcement of a successfully revised KORUS trade agreement comes as excellent news for the U.S. beef and pork industries because it helps ensure that we will continue to be able to serve the growing South Korean market and a critically important customer base. The United States is the largest supplier of beef to Korea and trails only the European Union as the second-largest pork supplier. U.S. red meat exports to Korea set a record last year of $1.7 billion, up 19% year-over-year and up 69% from 2012.
“Under KORUS, most U.S. pork products now enter Korea duty-free. The duty on U.S. beef has been reduced from 40% to 21.3% and will continue to decline each year until it is eliminated by 2026. It is especially important that these tariff rate reductions are maintained, because the other major pork and beef suppliers to Korea also have free trade agreements with similar market access terms.”
North American Meat Institute President and CEO Barry Carpenter issued this statement:
“The successful revision of the U.S.-South Korea Free Trade Agreement announced today by the Trump administration is welcome news for the U.S. meat industry, as it safeguards crucial access to one of our fastest growing, most important export markets.
“The agreement reached between the U.S. and South Korean governments not only ensures U.S. meat producers, processors and packers will retain their strong competitive advantage in this vital Asian market, but also affords South Korean consumers continued access to high-quality U.S. meat products they increasingly demand.
“The U.S. is the largest supplier of beef to South Korea and second largest pork supplier. In 2017, U.S. red meat exports to South Korea reached a record $1.7 billion, up 69% since the agreement’s entry into force in 2012. Most U.S. pork products now enter South Korea duty-free, and the tariff on U.S. beef, which has been reduced from 40% to 21.3%, will continue to decline each year until it is eliminated by 2026.
“We are pleased the negotiations did not change the terms for U.S. meat exports, and urge that these tariff rate reductions be maintained in any successive amendments to the agreement.
“The future growth of the U.S. agricultural economy, and meat and poultry sector, depends upon a fair and robust trade relationship with South Korea, and we commend the administration’s efforts to negotiate constructive changes to KORUS that will further strengthen our bilateral relationship.”
USDA Secretary Sonny Perdue applauds President Trump, Lighthizer and the U.S. trade team for the collaboration with Korea to get this deal done, to “protect the strong agricultural components that were built into the pact. Korea has long been an important trading partner for U.S. agriculture and currently ranks as our sixth-highest value market. U.S. agricultural exports to the country have increased 95% over the past decade and we look forward to continued growth. Through this new agreement in principle, progress was also made with regard to Korea’s customs verification procedures, which have been a substantial concern related to exports of U.S. agricultural and industrial goods.”