US poultry to benefit from US-Korea FTA
December 6, 2010
by Meat&Poultry Staff
STONE MOUNTAIN, Ga. – While much us being made of how the US-Korea Free-Trade Agreement will impact the US red meat industry, the agreement is also significant for the US poultry industry. The USA Poultry & Egg Export Council (USAPEEC) said it strongly supports passage of the U.S.-Korea Free Trade Agreement. Concluded on April 1, 2007, the agreement, which is currently pending in Congress, would maintain and expand exports of US poultry and egg products while strengthening US economic relations with an important trading partner in Asia, USAPEEC said.
With exports comprising up to 20% of annual poultry production, expanding export markets is vital to the long-term health of the industry. At the same time, exports have come under intense pressure because of market-access disruptions in major markets, such as Russia and China. This makes growth in other major markets, such as South Korea, even more important to our industry.
Although South Korea is a wealthy country, USAPEEC relayed that country’s per-capita consumption of broiler meat increased by only 4% annually from 1999 to 2009. Per capita broiler consumption is expected to grow from 15 kilograms to 17.8 kilograms by 2015 and to 20.2 kilograms by 2020. This translates into total broiler meat consumption of 875,000 metric tons by 2015 and more than 995,000 metric tons by 2020, USAPEEC added.
In 2009, the value of exported US poultry and related products to South Korea totaled $46 million, down 12.3% from $52.4 million in 2000. Currently, South Korea is the twelfth-largest export market for US broiler products by volume and the tenth-largest export market by value. For US turkey exports, South Korea is the tenth-largest export market by quantity and the eleventh-largest by value.
“To maintain and expand these US poultry exports, the United States needs to act quickly to demonstrate our commitment to reducing trade barriers and promoting open and fair trade,” USAPEEC said.
Passing and implementing the free-trade agreement would likely create an additional $750 million in trade over the first 10 years of the agreement by reducing tariffs and technical barriers to trade. Under the KORUS, Korea would phase-out all tariffs on poultry and egg products of 18% and 27% over 10 to 12 years. South Korea would also recognize the equivalency of the US food-safety inspection system for poultry and would agree to regulatory harmonization through the use of international standards, such as those from the World Organization for Animal Health (OIE). These steps on technical issues would sharply reduce the potential for future trade disruptions, PEEC said.
“If approved, the KORUS would likely result in expanded US poultry and egg exports both because of higher Korean poultry imports and market share gains from competitors such as Brazil,” USAPEEC added. South Korea currently imports 57% of its broiler meat from the US. As tariffs decline over the KORUS implementation period, import costs will decline and competitors will be displaced.
As a result, South Korean broiler imports from the US are expected to increase by $52 million (40,000 metric tons) in the first year, by $60 million (50,000 metric tons) by 2015 and by $120 million (100,000 metric tons) by 2020 from current levels. By the time the agreement is fully implemented, US poultry exports are expected to triple to more than $150 million annually.
“Failure to approve the KORUS FTA will result in a considerable loss of US market share to competitors, especially those who have signed FTAs with South Korea,” USEPEEC warned. “South Korea currently has agreements with ASEAN, the European Union, India, Peru and Singapore and is considering FTAs with China, Mexico, Japan, Australia and Canada.”
The EU agreement will eventually end all agricultural tariffs and introduce the EU’s “precautionary principle” into Korean agricultural policy. While EU products enter duty-free, US poultry will face 18%-27% duties without the KORUS. Future agreements with China and other partners could also cut into US market share without KORUS, USAPEEC said.