U.S. – Korea Free Trade Agreement Critical For Dairy Export Growth
The U.S.-Korea Free Trade Agreement (KORUS) began on March 15, 2012. This trade agreement between the U.S. and South Korea has resulted in incredible gains of market share for U.S. products in the Asian Pacific region. This is due largely in part to the reduced tariffs for U.S. exporters to send goods to South Korea.
“This agreement is incredibly valuable for U.S. agriculture,” says Darci Vetter former chief ag negotiator for the U.S. Trade Representative. “Korea is one of those countries where average ag tariffs are well into the double digits. You’re looking at 50-60% on some of our products.”
Since the agreement took effect in 2012, beef exports to South Korea increased 60% and cheese exports increased 250%. Several other fruit and vegetable products have also seen huge gains.
“Some of the tariffs haven’t even phased out to zero yet, and already we’re seeing big results,” Vetter says. “A broad range of U.S. products are seeing huge market penetration into Korea.”
According to Shawna Morris of the U.S. Dairy Export Council (USDEC), South Korea is America’s No. 2 cheese export market after Mexico. In 2016, U.S. cheese shipments to South Korea totaled nearly 94 million pounds, roughly 15% of total U.S. cheese exports. Because of KORUS, USDEC estimates total South Korean cheese trade will increase by another 27% from 2015-2021.
Because the U.S. pulled out of the Trans-Pacific Partnership agreements in February, Korea is really our only foothold in the Asian Pacific region, Vetter says, a region that has been critically important to the export growth of U.S. dairy.
“It’s a key partner and key piece of economic integration into the region and if we lose that we’d really be starting from scratch in one of the most dynamic regions of the world,” she says. “For economic reasons for agriculture alone I think pulling out of KORUS is a dangerous thing to do.”
Given how difficult North Korea has been lately, Vetter says now more than ever it’s time to “show our unity” with South Korea and America’s commitment to allies in the region.
“It’s particularly vexing to me that now is the time we would be saber rattling about breaking up the economic union we have with this country,” she says.