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Obama to Push Deal to Finalise Korea Trade Pact

by 5m Editor
1 July 2010, at 9:01am

US - President Obama has signaled his intention to set a deadline for removing outstanding obstacles to the implementation of the US-Korea Free Trade Agreement (FTA) to gain congressional approval of the deal in 2011.

The FTA would be one of the most lucrative ever for the US pork industry, according to the National Pork Producers Council, which has championed the pact for three years now.

At the G-20 summit in Toronto this past weekend, the president indicated he wants the deal done by the next G 20 meeting, which will be held in Seoul, South Korea, in November. US Trade Representative Ron Kirk will be tasked with working with his Korean counterpart to bring about.

The US-Korea FTA was completed and signed on 30 June 2007, but it has been awaiting action by Congress on the necessary implementing legislation. That legislation has been held up by demands from some lawmakers that improvements be made to the agreement in certain sectors, including automobiles.

“Having a firm deadline for resolving the outstanding issues is a major step forward and is wonderful news for American pork producers,“ said NPPC President Sam Carney. “This is what we have been hoping to hear for almost three years,“ he added. “The export opportunities the FTA offers US producers of pork and many other agricultural products in the Korean market are truly remarkable.“

According to Iowa State economist Dermot Hayes, by the end of the FTA phase-in period, total US pork exports to Korea will be almost 600,000 metric tons. This represents nearly twice the current US export level to Japan – currently the top value market for the US pork industry. The FTA will lift live hog prices by a staggering $10 per animal when fully implemented and will generate an additional $825 million in US pork exports. Korea alone will absorb 5 per cent of total US pork production, and the FTA will create more than 11,000 new jobs because of increased pork exports alone.

“Given the difficulties our industry has faced over the past two years because of the economy, H1N1, higher costs of production and unjustified foreign trade barriers, the prospect of a firm date for implementation of the Korea FTA would be great news for US pork producers,“ Mr Carney said.

“It would also help many other American farmers who depend on export markets for a major share of their income and who have been growing fearful that agreements between Korea and some of our competitors could leave us worse off than we are now,“ Mr Carney added. Korea has in place or is currently negotiating 13 other trade agreements, covering some 50 countries, many of which are competitors in food and agricultural products.

The Korean market is now the fifth largest for US agricultural exports, valued at $3.9 billion in 2009. According to economic analysis by the American Farm Bureau Federation, the Korea FTA would expand those exports in a wide range of commodities and result in $1.8 billion in additional sales – a 46 per cent increase.

Commodities that will gain immediate duty-free access to the Korean market upon implementation include wheat, feed corn, soybeans for crushing, hides and skins, cotton and a broad range of high-value agricultural products. These include almonds, pistachios, wine, bourbon and Tennessee whiskey, raisins, grape juice, orange juice, fresh cherries, frozen French fries, frozen orange juice concentrate, corn gluten feed and meal and pet food.

A number of commodities will gain free access two years after implementation, including avocados, lemons, dried prunes and sunflower seeds, or five years, including food preparations, chocolate and chocolate confectionary, sweet corn, sauces and preparations, corn sweeteners, corn oil, other fodder and forage (alfalfa), breads and pastry, grapefruit and dried mushrooms.

Other US farm products will benefit from expanded market access opportunities through new or expanded tariff rate quotas. These include skim and whole milk powder, whey for food use, cheese, starches – including high-value modified corn starches – barley, popcorn, and soybeans for food use. Market access improvements will also be seen for beef products, pears, apples, grapes and oranges.

The US-Korea FTA is one of three that are pending approval by Congress. Agreements with Colombia and Panama also have been awaiting action for more than three years. NPPC has been calling for action on all three FTAs for years, pointing out the enormous risk of letting other countries move forward first.