Emphasizing the importance of creating jobs and giving American products an advantage in the Asian-Pacific market, Agricultural Secretary Tom Vilsack outlined the benefits of the U.S.-Korea Foreign Trade Agreement (KORUS) in a news conference earlier this week.
The trade agreement was negotiated between the United States and South Korea in December, 2010, and will soon be presented to Congress for ratification. The agreement would immediately eliminate tariffs on 60 percent of U.S. exports to Korea, including wheat, corn, soybeans, cotton, orange juice and wine, among other commodities. It would allow for the reduction of tariffs on U.S. beef from 40 percent to zero by 2016. Tariffs on pork would be reduced by 90 percent by that year.
According to Vilsack, this reduction in tariffs is expected to lead to the doubling of American exports over the next 5 years, and to create at least 70,000 new jobs. The agreement would increase agricultural exports by $1.8 billion per year.
“The U.S.-Korea Foreign Trade Agreement represents an historic opportunity to increase exports, to create jobs, and to bolster the American economy, as well as strengthening a very important and vital strategic alliance in the Asian-Pacific market,” said Vilsack.
Vilsack sees this alliance as one that’s important to create quickly in order to gain an advantage over Korea’s other trade partners. Australia, a major U.S. competitor in the beef market, is currently reaching a trade agreement with Korea that, if put into effect before KORUS, would give Australians a price advantage over the U.S. for at least the next 15 years, according to the Secretary.
The European Union has passed its own agreement with Korea, which will go into effect July 1. Vilsack stressed the importance of ratifying the U.S.-Korea trade agreement before then.
“If we don’t act quickly and decisively, it is possible that America’s competitors will achieve the advantage in the Korean market,” Vilsack said.
The U.S. is currently the fourth biggest exporter to that market. In the past, the U.S. was the number one exporter to Korea, until U.S. beef was banned from Korean markets in 2003 after three cases of bovine spongiform encephalopathy (BSE), or mad cow disease, were discovered here. While the U.S. beef market in Korea has now been reopened, its share of Korea’s import market has fallen from 21 percent to 9 percent since that time.
And while South Korea again allows importation of U.S. beef, it will not accept U.S. beef products from cattle aged beyond 30 months, something that will not change with the new agreement.
State Finance Committee Chairman Max Baucus has criticized the current free trade agreement for not doing more to open Korea’s market to U.S. beef products, calling for a “roadmap for increased market access for U.S. beef in Korea” before he will support the agreement.
When asked about his response to Baucus’s position, Vilsack said he hopes the Chairman will consider the need to expedite the ratification of the trade agreement in order to create much-needed jobs and give America a competitive edge in the Korean market.
“I think that when the Chairman understands the competitive circumstances that we find ourselves relative to Australia, and the fact that we have moved a good deal in terms of getting markets open in Korea … that perhaps he will be more comfortable with the agreement,” Vilsack said. “At the end of the day, this is an agreement that’s important for beef and pork producers and absolutely important for agriculture generally.”
So important that the American economy will experience more growth from its trade agreement with South Korea than from its last 9 trade agreements combined, according to the U.S. International Trade Commission.
And Vilsack believes that U.S. beef will play a significant role in that growth despite persisting beef tariffs and restrictions. “We are anxious to promote as much trade within the framework of the agreement as possible so that we increase the comfort level of Korean consumers and get them to acquire a very solid taste and desire for American beef. It’s a quality product. We believe it’s the best in the world, and as consumers are exposed to the best in the world, they’re going to continue to want more of it,” he said.
“We just can’t let any grass grow. We’ve got to move and we’ve got to move aggressively.”