Administration prepares to move Korea trade pact


Issue Date: March 16, 2011
By Ching Lee

The Obama administration is on the verge of sending the long-awaited U.S.-Korea trade agreement to Congress for final approval and has urged lawmakers to quickly ratify the deal, which is expected to boost U.S. agricultural exports by $1.8 billion annually.

In a media conference call last week, Agriculture Secretary Tom Vilsack stressed the importance of the trade agreement for supporting at least 70,000 new jobs and bolstering the American economy, as well as strengthening ties in the Asia-Pacific region.

"Economic output is estimated to grow more under this agreement than from our last nine trade agreements combined," he said. "The U.S.-Korea trade agreement is a win not just for America's farmers and ranchers but for millions of Americans who depend on the farm economy for jobs and wages."

He indicated the two countries are still finalizing the translation of the agreement but that negotiations concluded in December, setting the stage for congressional action.

He also warned that delaying the deal would allow foreign competitors, who are finalizing their own trade pacts with South Korea, to take advantage of the lucrative Asian market, potentially costing the United States jobs and export opportunities.

Vilsack noted the European Union recently passed its own agreement with South Korea that goes into effect July 1. He said the administration's goal is to implement the U.S.-Korea trade agreement ahead of that deadline.

South Korea is also negotiating a trade deal with Australia, a major competitor for U.S. beef. If Australia completes its agreement with South Korea before the United States, Vilsack said, the reduced tariffs for Australian beef will take effect before those of U.S. beef, giving the Australians a price advantage for at least the next 15 years.

"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," he said.

However, some Republican lawmakers say pending trade pacts with Colombia and Panama should also be considered and have threatened to block ratification of the Korean trade deal unless the administration sends all three trade agreements together for congressional approval.

Like the South Korea deal, the trade agreements with Colombia and Panama were negotiated by the Bush administration but never approved by Congress.

During a hearing last week before the Senate Finance Committee, Sen. Orrin Hatch, R-Utah, a ranking member of the committee, said he supports the Korea trade agreement and wants to see it move as soon as possible, but he raised doubts that the president is serious about moving the Colombia and Panama deals.

"After two years, it is still an open question whether the president will ever see fit to submit the Colombia and Panama agreements to Congress anytime in the near future, if at all," he said.

Vilsack said President Obama made clear in his State of the Union address about his goal of doubling U.S. exports by 2015 and his commitment to completing all three trade agreements. He said the president has directed U.S. Trade Representative Ron Kirk to "intensify engagements" on the Panama and Colombia deals and to resolve outstanding issues.

"But right now we have before us the U.S.-Korea trade agreement that has historic bipartisan support from Democrats and Republicans, as well as from business and labor, from the Chamber of Commerce to the (United Auto Workers union), and it's time to more forward," he said.

Josh Rolph, director of international trade for the California Farm Bureau Federation, noted "a heightened sense of urgency by both the administration and Congress in recent weeks to move the three trade deals forward."

"What has evolved," Rolph said, "is an administration focused on Korea, while a growing bipartisan coalition in Congress wants Korea to advance together with Colombia and Panama. Moving all three would certainly be our preference, although the Korea trade agreement affects by far the biggest market for California agriculture."

Two major sticking points that have stalled the Korea trade deal involve U.S. concerns regarding access to the Asian nation's beef and auto markets. In December, the White House renegotiated the deal to secure more favorable terms for the U.S. auto industry but did not come away with anything different for U.S. beef.

South Korea continues to restrict shipments of beef from cattle over 30 months old due to fears of bovine spongiform encephalopathy.

Once implemented, the U.S.-Korea trade agreement immediately eliminates duties on 60 percent of U.S. farm products exported to Korea, including almonds, pistachios, cherries, cotton, wine, wheat, corn and whey for feed use.

It will also reduce duties on other products over time. Korea's current 40 percent tariff on U.S. beef, for example, will be eliminated over 15 years. Also, more than 90 percent of pork exports will be duty-free by 2016.

Last year, the United States provided nearly 30 percent of South Korea's total farm imports for a total of nearly $5 billion, making Korea the fifth-largest export market for U.S. farm products, according to the U.S. Department of Agriculture.

U.S. beef exports to South Korea also nearly doubled in 2010 compared to a year earlier. South Korea imported 125,000 tons of U.S. beef last year, a 97 percent increase from 2009.

However, in just over a decade, the U.S. share of the South Korean import market for goods has fallen from 21 percent to 9 percent, Vilsack noted. Even though U.S. exports to the region are growing, the United States' share of the Asian-Pacific import market is falling as Asian countries secure preferential trade agreements that exclude the United States, he said. Across the region, 180 bilateral agreements excluding the United States are in force, with 20 more awaiting implementation and 70 under negotiation.

"That's why we've got to move forward as quickly as possible so that we also generate additional momentum for ratification of other trade deals once completed, which would include Colombia and Panama," Vilsack said.

(Ching Lee is an assistant editor of Ag Alert. She may be contacted at clee@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.