May 8, 2007

FTA with EU to upset South Korea's meat and dairy sectors

As South Korea currently negotiates a free trade agreement with the European Union, a South Korean research institute said FTA with EU would certainly hurt South Korean meat, dairy and alcoholic beverages sectors.

South Korea, fresh from a free trade agreement with the United States, began talks with the EU on Monday for a similar deal. It hopes to wrap up the negotiations within a year.

A report by the Nonghyup Management Institute, a semi-official research institute said a free trade deal with the EU "could damage the domestic agricultural sector by sparking a surge in imports of wine, whiskey, pork and dairy products" as EU has "comparative advantage in such products.

Imports of poultry and pork could also increase sharply, it added.

South Korea imported 53,000 tonnes of pork from Europe in 2005, accounting for 70 percent of its entire imports that year. In 2003, imports of poultry also surged after Seoul imposed a ban on meat from the United States and Thailand due to bird flu outbreaks.

EU pork and poultry are about 60 percent cheaper than their South Korean counterparts.

South Korea does not import beef from the 27-member European Union due to mad cow disease occurrence.

The EU is also expected to increase sales of dairy products, according to the report. Powdered milk and cheese already account for 30 percent and 10 percent of the local market, respectively.

However, the report said, the EU seems to be more inclined to allow special clauses for so-called sensitive agricultural goods that could help reduce fallout of the proposed deal on its agriculture sector.