November 11, 2010

 

US beef exporters urge prompt South Korean trade pact

US beef exporters are pushing the Obama administration and Congress to approve a pending trade agreement with South Korea without delay rather than hold out for concessions on their behalf.

 

US exports of beef are up 175% in the first eight months of this year to US$331 million, regaining sales that collapsed following concern about mad-cow disease that sickened animals in 2003, according to Commerce Department data. Australia and Canada are pursuing their own free-trade agreements (FTA) with South Korea, and their suppliers may gain on US producers, according to the American Meat Institute.

 

"The market is coming back and it would be a shame to lose this opportunity," said William Westman, vice president for international trade at the Washington group, which represents companies such as Tyson Foods Inc and Cargill Inc.

 

US beef has become a political issue in Korea, and Lee had to apologize in 2008 after agreeing to allow imports, which triggered candlelight vigils by tens of thousands of people concerned about food safety. The protests prompted US producers to limit exports to cows that are younger than 30 months, which may have a lower risk for mad-cow disease.

 

While the beef industry is pushing for quick approval of the accord, Senator Max Baucus, a Montana Democrat and chairman of the Finance Committee, has said the FTA can't win approval by Congress unless the 30-month cap is removed.

 

More than 90% of US beef exports come from cows younger than 30 months, according to the National Cattlemen's Beef Association.

 

Beef producers are worried that pushing for such a pledge may mean a delay for the overall agreement, or a backlash among Korean consumers who will spurn US beef, said Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics in Washington.

 

Once the agreement goes into effect, Korea will phase out its 40% duty on beef imports, cutting it by 2.5% a year for 15 years, Westman said.

 

If the US agreement takes effect before Korea finishes deals with Canada and Australia, it would give American producers an advantage for 15 years, he said. If not, producers in those countries would get a head start on the tariff cuts.

 

US beef exports to Korea are on course to exceed US$500 million this year, more than double last year's total of US$208 million, according to Commerce data. In 2003, the exports totalled US$742 million, making Korea the third-largest export market after Japan and Mexico.

 

The South Korea accord is the biggest for the US since the 1994 North American Free Trade Agreement, and the Obama administration's stated goal of completing it is being watched as a signal about whether the US is capable of getting trade deals approved by Congress, according to the National Foreign Trade Council in Washington.