Revised Trade Deal with South Korea Seen as Beneficial for Agriculture

While the revised KORUS trade deal didn't include specific agriculture trade improvements it does paint a promising picture of things to come say farm industry officials. ( Multimedia Graphic Network, Inc. )

The renegotiation of the U.S.’s free-trade agreement with South Korea is being welcomed by farm groups even though little changes in terms of agriculture trade.

On Sept. 24, President Donald Trump and South Korean President Moon Jae-in signed a revised KORUS trade deal that largely benefits American automobile manufacturers. South Korea will now purchase twice as many cars per year going from 25,000 to 50,000 per manufacturer per year, while also allowing U.S. environmental and emissions standards for cars and parts.

“These outcomes give the finest American-made automobiles, innovative medicines, and agricultural crops much better access to Korean markets,” Trump says.

Despite the focus on automobiles, U.S. farmers could see improvements in an already growing trade relationship with South Korea. Since KORUS went into effect in 2012, trade between the two countries has increased more than 50% from $6.3 billion to $9.8 billion in 2017. Agriculture accounts for the majority of trade to South Korea with $6.9 billion worth of products being purchased last year by the U.S.’s sixth largest export market.

“I think our farmers are going to be extremely happy. It was very limited as to what they could do and what they could send. And now it’s a open market, and they’re going to be sending a lot more farm products. That makes me feel very good. I love our farmers,” Trump adds.

KORUS Good for Agriculture

Several agriculture groups and officials welcomed the revised trade deal as reaffirming the two countries’ commitment to one another.

“We are entering into a new KORUS agreement that is a better deal for the entire United States economy, including the agricultural sector. This represents an important improvement in trade relations between our two nations, building on long-standing cooperation we have enjoyed,” says Secretary of Agriculture Sonny Perdue.

“Signing of the revised KORUS agreement is reassuring news for the U.S. beef and pork industries. The market access terms secured in the original KORUS not only helped increase U.S. red meat's market share in South Korea, but also bolstered consumption by making our beef and pork products more affordable and accessible to Korean consumers. The United States is the largest supplier of beef to Korea and trails only the European Union as the second-largest pork supplier,” says U.S. Meat Export Federation (USMEF) President and CEO Dan Halstrom.

Since KORUS was implemented six years ago, the U.S. has increased red meat exports to South Korea by 69%, according to USMEF. Last year red meat trade to South Korea set a record of $1.7 billion, up 19% year-over-year. Both beef and pork trade are currently up more than 50% in value compared to last year’s record amount.

“We applaud President Trump for his leadership in improving KORUS for other sectors and we know that a modernized KORUS agreement will allow U.S. producers to continue focusing on what we do best: Providing safe, high-quality beef for Korean families to enjoy,” says National Cattlemen's Beef Association President Kevin Kester.

Both the National Pork Producer’s Council and U.S. Dairy Export Council shared with Farm Journal that the developments with KORUS haven't changed anything specifically for pork and dairy, but should still be good for trade going forward.

“Whether it’s corn, soybeans and wheat, or poultry, eggs and meat products, our agricultural exports to South Korea are growing thanks to the U.S. – Korea FTA,” says American Farm Bureau Federation President Zippy Duvall. “Renewal of our trade deal with South Korea is much-needed good news and help for our farmers and ranchers as the agricultural economy struggles.”

Optimism for More Free Trade

There is a hope between agriculture stakeholders a renegotiated KORUS is a sign of things to come with other trade deals and shows that free trade works.

“This agreement adds to the momentum building for President Trump’s approach to trade, which is to stand strong for America’s interests and strike better deals. I am optimistic that the dominoes will continue to fall: KORUS, then a new NAFTA, and new agreements with the European Union, Japan, and, most notably, China. As an avid sportsman, I would say ‘put this one in the bag and keep hunting for more,” Perdue says

KORUS has made U.S. pork duty-free when entering South Korea and has improved tariff rates for beef. Prior to KORUS there was a 40% duty on U.S. beef that has now dropped to 21.3%. The duty will continue to decrease each year until being eliminated in 2026. Kester and Halstrom both say the reduction and elimination of those tariff has vastly benefited red meat trade.

“All major red meat competitors also now have free trade agreements with Korea, but the U.S. has benefited from KORUS being implemented earlier than most of these FTAs, providing the U.S. with a head start on tariff elimination. USMEF thanks our U.S. trade officials for recognizing the importance of the favorable terms included in KORUS, and maintaining them in the revised agreement,” Halstrom says.

“KORUS is a prime example of how U.S. producers benefit from trade agreements that reduce tariffs and implement science-based standards,” Kester says. “KORUS tore down those barriers, helping turn South Korea into a leading destination for U.S. beef. In fact, exports to South Korea accounted for over $1 billion annually over the last two years.”

South Korea is now the second-largest value market for U.S. beef (following Japan) and fourth-largest for U.S. pork (behind Japan, Mexico and China/Hong Kong).

Duvall hopes the Trump Administration will continue its work on trade deals. “Securing export markets for our products is critical, and we encourage the administration to continue to push for conclusion of other trade agreements, such as an updated NAFTA agreement with Canada and Mexico,” Duvall says.

With the gains in South Korea, Duvall would like to see an emphasis put on other Asian markets.

“As Agriculture Secretary Sonny Perdue recently stated, now would be a good time to take a fresh look at the Trans-Pacific Partnership, an agreement that Farm Bureau has estimated would boost U.S. agricultural exports by $4 billion per year. Rejoining TPP negotiations would send a clear message to other nations, such as China, that the U.S. is serious about growing key markets for our agricultural products around the world,” Duvall adds.