Korea Cuts Import Tariffs

by 5m Editor
4 February 2011, at 8:31am

SOUTH KOREA - At the end of January, the Korean government announced that it was cutting the import duty on 60,000 tonnes of pork from 25 per cent to zero until 30 June 2011.

The government said it hoped this action would help curb rising domestic pork prices, which have been spiraling upward due to the widespread FMD cull.

In the coming months, the government said it would reassess the situation to decide whether to extend the Tarif Rate Quota for the second half of the year.

The tariff cut will be managed through a temporary tariff rate quota (TRQ), which is divided into two parts according to analysts at teh USDA Foreign Agricultural Service.

The first part is 50,000 tonnes of raw ingredients for processed meat products, such as sausage.

The Korea Meat Industry Association (KMIA), which represents about 80 per cent of the local meat processors, will allocate this portion of the quota to members and non-members based on several factors, including: domestic pork usage; total pork usage in 2010; and annual production plans.

The remaining 10,000 tonnes of the quota is frozen pork bellies to be sold in the retail market.

The Korea Meat Trade Association (KMTA) will allocate this portion of the quota to retail stores based on outlet’s total pork sales and targeted retail price. Retailers willing to sell at a lower price than their competitors will be in a better position to win the allocation.

The FAS said that the TRQ will allow the United States to compete with Chile on a level playing field.

At present Chilean pork is currently facing a 7.2 per cent duty because of the Chile-Korea FTA.

As a result, the bulk of the TRQ is expected to come from the United States.

Wholesale carcase prices in Korea continue to climb upward because of the shortage of domestic pork. Retail prices have lagged wholesale prices because some store owners were artificially holding prices down - using pork as a loss leader.

On 12 January, however, retailers could no longer continue offering these discounts because wholesale prices kept rising.