August 6, 2010

Korean beef halts US approval of FTA

The US has not yet made a decision on whether wider access to the Korean beef market should be a precondition for the ratification of the pending free trade deal with Korea, a senior US official said Wednesday (Aug 4).

The Obama administration is still determining "what really needs to be done in the context of getting approval of the FTA, but not forgetting that it is still our goal to have a fully OIE-compliant trade regime with Korea. We're not sure whether those are the same path, or whether they could potentially be two different paths, and that requires consultation here at home before we start making additional proposals to the South Koreans," Under Secretary of Agriculture Jim Miller said.

The Paris-based World Organization for Animal Health (OIE) has classified the US as "a controlled risk country" for mad cow disease, the cause of Korean concerns over American beef since a few cases surfaced in 2003. That means the US can export beef with minor limits to certain cuts that may transmit mad cow disease to humans.

Autos and beef are two major concerns the US wants to address before ratifying the Korea FTA signed in 2007. President Obama in June ordered US Trade Representative Ron Kirk to complete talks with South Korea over autos and beef before he flies to Seoul for the G-20 Summit in November so he could present the deal to Congress early next year.

Beef is not an issue covered by the Korea FTA, but Senator Max Baucus (D-MT), chairman of the Senate Finance Committee, which handles trade, and some other lawmakers have threatened not to move for the approval of the Korea FTA unless Korea allows shipments of beef from cattle of all ages. Montana is said to be the biggest source of beef from old cattle.

Korea bans shipments of beef from cattle older than 30 months because of concerns over the human variant of bovine spongiform encephalopathy (BSE) or mad cow disease.

"No deal is better than a bad deal. I don't know why I should schedule a hearing," Baucus told Kirk at a Senate hearing, on the deal if shipments of US beef of "all cuts, all ages" are not allowed into Korea.

The US beef industry has called for a cautious approach, fearing a possible backlash in the Korean market, where US beef shipments have grown rapidly since Korea resumed imports in 2008.