Trump considering withdrawing US from FTA with South Korea
Sept. 6, 2017
by MEAT+POULTRY Staff
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Agriculture groups are rallying in support of KORUS.
WASHINGTON – Organizations representing agriculture interests launched an intense lobbying effort following indications from the White House that President Trump is preparing to withdraw the United States from the US-Korea Free Trade Agreement (KORUS).
Kent Bacus, director of international trade for the National Cattlemen’s Beef Association (NCBA) said rumors of a withdrawal from KORUS surfaced at the end of last week and later were reported in the press. That’s when NCBA and other organizations sprang into action.
“We alerted our membership and affiliates,” Bacus said.
|Kent Bacus, director of international trade for the National Cattlemen's Beef Association
“We’re continuing to encourage the many different members of Congress that have contacted us and asked how they can help,” he told MEAT+POULTRY. “This is a very good trade agreement. This has been something that has been very beneficial. We can’t afford the setbacks that this would create if we were to pull out.”
On Aug. 22, US Trade Representative Robert Lighthizer and Korean Trade Minister Hyun-chong Kim participated in a day-long videoconference to discuss implementation of KORUS. Lighthizer highlighted the administration’s concerns about the FTA along with potential modifications and amendments to remedy “…a large trade imbalance with Korea.”
“The United States and Korea have an important economic relationship,” Lighthizer said in a statement. “Unfortunately, too many American workers have not benefited from the agreement. USTR has long pressed the Korean government to address burdensome regulations which often exclude US firms or artificially set prices for American intellectual property. This negotiation offers us an opportunity to resolve these and other barriers.”
Lighthizer said US goods exported to South Korea decreased while the trade deficit overall with Korea nearly tripled since KORUS went into effect.
“American service exports have seen virtually no growth in the past four years,” he said. “President Trump is committed to substantial improvements in the Korean agreement that address the trade imbalance and ensure that the deal is fully implemented.”
But meat producers and processors have benefited from KORUS. Bacus said South Korea is the beef industry’s second-largest export market. Under the agreement, duties on beef exports will be reduced 2.7 percent annually over a period of 15 years. The cost savings generated by duty reductions are expected to boost exports of US beef to South Korea to more than $1 billion per year over the 15-year phase-out period, according to the US Meat Export Federation (USMEF) website. In 2015, exports of beef were valued at $810 million.
Withdrawing from KORUS would put US beef producers at a tremendous disadvantage to Australia, which implemented a trade agreement with South Korea in 2014 that will eliminate duties on beef cuts by 2028. Bacus said withdrawing from KORUS likely will mean the return of 40 percent tariffs on US beef shipped to South Korea.
NCBA is hoping a call to action will clarify what’s at stake for beef producers. Bacus said “When your back’s against the wall, you have to act and hope that you’re successful. We’re not the only ones asking the president not to do this.”
In a call to action, the National Pork Producers Council (NPPC) urged its constituents to contact legislators.
“NPPC staff has been working feverishly to safeguard producer opportunities in Korea since we learned of this unfortunate development,” according to a letter written by Ken Maschhoff, NPPC president and Neil Dierks, NPPC CEO. “Now that the matter has become public we wanted to make sure you were aware of the problem and that NPPC is leaving no stone unturned in its efforts to persuade the Administration not to invoke the 180-day notice of termination in KORUS.”
US pork and variety meat exports to South Korea increased from $190 million in 2010 to $421 million in 2012 and $470 million in 2015 under KORUS, according to data from USMEF. Tariffs on sausages, frozen bellies and other products were phased out in 2014 and 2016. Before KORUS, duties on US chilled pork were 22.5 percent and 25 percent on frozen pork.
The American Soybean Association in August warned that withdrawing from KORUS and “…the larger strategy of brinkmanship with regard to trade agreements by the White House…” could have disastrous results for soybean growers.
“With respect to South Korea, we supply nearly half of the 1.3 million tons of soybeans that country imports, with no tariffs as a result of the KORUS agreement,” ASA President Ron Moore said in a statement. “Most of Korea’s soybean imports, however, come from our competitors in Brazil and Argentina. If we withdraw, reinstatement of tariffs will make it hard to maintain our market share and will further increase our competitors’ advantage. And it would be devastating for our US livestock customers who export meat products to South Korea.”
“As American soybean farmers, we demand that the US remain in KORUS, and that we move forward to negotiate new trade agreements rather than retreating from existing ones,” Moore concluded. “We must expand rather than abandon access to essential overseas markets for the products we produce.”
Bacus said NCBA communicated their concerns to Agriculture Secretary Sonny Perdue before news broke of the potential withdrawal from KORUS. Bacus said NCBA is hoping Perdue will engage and persuade President Trump “…to take a breath and back off.”
“We’ve been trying to encourage the White House to open new markets instead of closing existing ones,” Bacus said. “It’s frustrating, but that’s all we can do.”