South Korea free trade agreement, and what it means for U.S. beef
February 12, 2012
With an exciting year for beef exports in 2011, Dan Halstrom, Vice President of the U.S. Meat and Export Federation (USMEF) spoke with Charlotte Johnston, TheCattleSite editor to discuss the South Korea free trade agreement.
Last year the U.S. announced three new free trade agreements (FTA) with Columbia, Panama and most importantly, South Korea.
In 2011, total U.S. beef exports boomed, breaking post 2003 records. 2011 exports increased by 20 percent in volume to 1.78 million tons between January-November 2011, with a value of $5 billion. Halstrom expects this success to continue into 2012.
For 2012, the USMEF has estimated that beef exports will increase by five percent in volume.
Halstrom admitted that predictions are probably slightly on the conservative side. “With talks of a much smaller cowherd, prices are likely to stay high, so we expect to see a 5-10 percent increase in the value of beef exports in 2012,” said Halstrom.
South Korea markets
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“The FTA announcement is good news for the U.S. beef industry,” Halstrom explained. “Once in place, there will be a 2.7 percent decrease in tariffs a year. The current duty on U.S. beef imports into South Korea is 40 percent. With a 2.7 percent decrease a year, in around 15 years import duties on U.S. beef will be eradicated in South Korea.
As to when this will come into action, Halstrom said he could not comment, but hopes that it will be soon. “The sooner the better. South Koreans are big beef eaters, so this deal means a lot for the U.S. beef industry.”
Last year beef and pork imports into South Korea increased substantially following a foot and mouth outbreak which caused the South Korean domestic cattle and pig herds to suffer dramatic losses.
Since 2003, when the U.S. was hit with bovine spongiform encephalopathy (BSE), the industry has been working tirelessly to convince and prove to the Asian markets, in particular, that U.S. beef is a safe product.
Halstrom said that the USMEF has worked to reassure comfort levels with South Korean consumers. “This has been a steady improvement,” said Halstrom. “However, there is still some way to go.”
In 2011, beef imports to South Korea increased by 38 percent in volume, to 140,000 tons between January-November 2011. The value increased 32 percent, to $618 million.
Speaking about competing with Australia for South Korean markets, Halstrom said, “They were indeed a formidable competitor. However I believe they are targeting different markets and marketing their products differently, with a lot of grass-fed beef coming from Australia.”
– Charolotte Johnson, TheCattleSite editor/Livestock Marketing Association