U.S., Korean Trade Agreement will benefit agriculture
By Kylene Scott
Passing a trade agreement with Korea is extremely important and needs to be done soon, according to U.S. Secretary of Agriculture Tom Vilsack.
"At USDA we believe it represents a historic opportunity to increase exports, to create jobs and to bolster the American economy, as well as strengthening a very important and strategic alliance in the Asian-Pacific area," Vilsack said in a March 8 press conference. "The U.S. International Trade Commission estimates that the economic input to America will grow more from the U.S.-Korean Free Trade Agreement than from our last nine trade agreements combined."
Vilsack said President Barack Obama is committed to completing the trade agreement, and the FTA has bipartisan support from both Democrats and Republicans. However, Congress must act quickly.
"I note that the European Union recently passed its own agreement with Korea that goes into effect July 1, and my hope for the farm economy, and I believe the president's hope for the overall economy as well, is that Congress moves now to ratify and implement this trade agreement as quickly as possible," Vilsack said.
America provides roughly 30 percent of Korea's total agricultural imports, worth approximately $5 billion in ag trade, making Korea the fifth largest market for U.S. farm products.
"But interestingly enough, the U.S. used to be Korea's biggest trading partner. Since 2003 we've fallen to fourth place behind China, the EU and Japan," Vilsack said. "In just over a decade, our share of Korea's import market for goods has fallen from 21 percent to just 9 percent. That's why we believe a ratified U.S. free trade agreement will expand agricultural exports by what we believe to be 1.8 billion dollars. That will help support another 16,500 jobs here at home."
Vilsack said by having the ratified agreement it will expand the agriculture exports by an estimated $1.8 billion, as well as adding jobs.
"That will help support another 16,500 jobs here at home," he said. "The agreement will immediately eliminate duties on a majority of the U.S. farm products that are currently exported to Korea."
Crops that would have a reduction or elimination of duties includes the following: wheat, corn, soybeans for crushing, whey for feed use, hides and skins, cotton, cherries, pistachios, almonds, orange juice, grape juice and wine. It will also reduce duties on many other products over time including those in the U.S. beef and pork industry.
"Korea's 40 percent tariff on U.S. beef will be eliminated over the next 15 years," Vilsack said. "Now I've said it will create and support tens of thousands of jobs across the nation and it will, but if we don't act quickly and decisively it's possible that America's competitors will secure their own trade deals with Korea, and that our competitors products will achieve the advantage in the Korean market."
One competitor in particular, Australia, has a deal on the table with Korea. If Australia completes its agreement before the U.S., the tariff cuts for Australian beef will take effect before those for U.S. beef. This would give Australian beef the price advantage for the next 15 years.
"That's why we believe it's important to act now," Vilsack said. "A ratified U.S.-Korean FTA will reduce tariffs on our beef exports to zero over time, enabling American beef producers to build on the exponential growth of exports to Korea--which reached $518 million in 2010, a one-year increase of 140 percent in value."
Even though U.S. exports to the region are growing, the U.S. share of the Asian/Pacific import market is falling because of Asian countries securing preferential trade agreements that exclude the U.S.
"Time to act is now to win the future, for jobs for our communities, for American competitiveness and for American agriculture is now," Vilsack said.
Farm products will benefit from the immediate duty free access. By 2016 more than 90 percent of pork exports will also be duty free.
"Right now, the average tariff on agricultural goods in Korea is considerably higher than the average U.S. tariff," Vilsack said. "Comparing 53.9 percent, the average Korean tariff, to 8.9 percent our average tariff."
Agriculture is responsible for one out of every 12 jobs in the U.S., and every billion dollars in farm exports supports roughly 8,400 jobs in the United States in agricultural and related industries.
"That's why its so important that Congress act quickly to ratify this agreement so we can get the benefits of it from American agriculture and the job growth opportunities at a time when we are looking to expand job opportunities," Vilsack said.
Vilsack hopes Congress will act quickly and hopes it will help increase the bottom lines for farmers and ranchers.
"In terms of our hope, and our belief is that it's in the best interest of America, it's in the best interest of American agriculture to get this agreement ratified as quickly as possible," Vilsack said. "For two reasons. One, it would allow for immediate reduction of tariffs on 60 percent of the ag products that are currently being exported to Korea, making them far more competitive and far more likely to purchase American goods, thereby creating better bottom lines for American farmers and ranchers, as well as additional job growth."
Vilsack doesn't want competitors getting the upper hand.
"And two, any delay gives competitors the opportunity to finalize their own agreements, which might make it more difficult for us to preserve market share and expand market share," Vilsack said. "So our hope is Congress responds quickly and favorably and we think there is a lot of bipartisan support for them to do so."
Kylene Scott can be reached by phone at 620-227-1804 or by e-mail at email@example.com.