June 14, 2010
South Korea and US still unable to ratify FTA
A US-South Korea free trade agreement, pushed by Iowa and US pork producers, has been delayed in Congress since the two governments completed negotiations in 2007.
"The US runs the risk of losing the Korean market within a decade if we can't get a free-trade agreement ratified," said Jong-hyun Choi, minister for economic affairs for the South Korean embassy, who met with US pork producers at the World Pork Expo in Des Moines last week.
Trade has emerged as an important factor for beef and pork producers in the US, who are faced with static or declining domestic markets.
US per capita red meat consumption has dropped by 25% since 1960, while consumption in Korea and most Asian nations have increased.
South Korea has proved to be one of the sturdier partners for US agricultural trade. Its purchases of 130,000 tonnes of pork, valued at US$215 million, ranked fifth among US agricultural export customers in 2009.
But Choi said those figures could fall if Congress fails to ratify a trade agreement, which essentially knocks off the 20% duties for imports to Korea.
"This is frustrating to us, especially since we've had trouble getting the Iowa congressional delegation to take the lead," said Sam Carney, president of the National Pork Producers Council and a hog producer from Adair.
US Senator Chuck Grassley, R-Ia., told a delegation from the Greater Des Moines Partnership in Washington, D.C., that the South Korean agreement was needed, but he said the Obama administration is waiting on the legislation.
Grassley called the South Korean agreement a "litmus test" for support of free trade.
"The president obviously doesn't want to submit the bill until he has the votes, and we have a situation where the unions are acting in a way that actually hurts American workers," Grassley said.
A spokesman for US Senator Tom Harkin, D-Ia., made the same point about White House involvement Thursday (June 10).
"Senator Harkin supports free trade," Harkin aide Grant Gustafson said. "But the process begins with the White House, and the Korean trade bill hasn't been sent over."
Carney, Choi and Don Butler of North Carolina, immediate past president of the National Pork Producers Council, said the trade agreement has become ensnared in the trade battles over automobiles.
US automakers have long accused Korea of discrimination against them in trade, which in turn has generated anti-trade sentiment among unions.
Cho was candid in saying that the heavy Democratic leaning of Congress has made ratification difficult.
"Frankly, I don't expect ratification before the election in November," he said.
Trade with two big customers, China and Russia, has resumed, helping push up pork prices. The nations temporarily shut off imports of US pork because of concerns about the H1N1 flu virus and other health concerns.
The result was a 30% drop in pork prices last year, extending a string of annual losses for pork producers. Iowa is the nation's leading pork producer, with almost 19 million animals and annual cash receipts of US$4 billion.
Korea has not been above such health issues, either. Along with Japan and China, it has restricted imports of US beef because of health concerns after the 2003 mad cow disease scare in the US. This has allowed Australia to become the No. 1 beef exporter to Korea.
