Trump looks to improve trade terms with South Korea
The Trump administration’s wish to modernize the U.S.-Korea Free Trade Agreement has the attention of U.S. fresh produce exporters who hope wrangling over the deal will help and not hurt booming export business.
The two countries are beginning discussions to update the deal, which took effect in 2012.
The Trump administration said in June that unfair trade practices by South Korea in the auto and steel industry have led to bigger U.S. trade deficits with the country, which have escalated from about $8 billion in 2012 to nearly $18 billion last year.
But the U.S. trade balance in agriculture shows a big surplus, at more than $5 billion in 2016.
The U.S. Trade Representative website reports that total exports of agricultural products to Korea totaled $6.2 billion in 2016, making it a top five export market. Leading U.S. agricultural exports to South Korea include beef and beef products ($1.1 billion), corn ($865 million) and fresh fruit ($389 million).
On the other hand, U.S. imports of agricultural products from South Korea totaled $519 million in 2016, less than 10% of U.S. ag exports to the country. Leading categories of U.S. imports from South Korea were processed fruit and vegetables ($81 million), snack foods ($49 million), other fresh fruit ($31 million) and fresh vegetables ($17 million), according to the USTR website.
Trading up
“For cherries, it has been an excellent market,” said Mark Powers, president of the Northwest Horticultural Council, Yakima, Wash. “We have seen tremendous growth since the (U.S.-Korea) free trade agreement.”
In 2012, the year the agreement went into effect, the tariff on U.S. cherries dropped from 24% to zero, he said.
“That tariff elimination was real money and that’s one of the reasons is that South Korea is our third largest export market for cherries,” he said.
U.S. Department of Agriculture statistics show U.S. fresh cherry exports surged from $39.5 million in 2011 to $114 million in 2016. Grape exports nearly doubled from about $14 million in 2011 to $28 million in 2016. U.S. nut exports soared from $189 million in 2011 to $303 million by 2016, according to the USDA. U.S. citrus exports to South Korea climbed from $181 million to $221 million in that period.
Room for growth
Powers said there is untapped potential in the South Korean market.
U.S. apples and pears are not yet allowed into South Korea, though the industry has been seeking access since the 1980s. When the General Agreement on Tariffs and Trade was signed in1994, South Korea pledged to open its market to apples, he said.
“We are still working on it to this day,” he said.
With more than 20 years of work on the request for access, South Korea ag officials need to act, he said.
It is not clear if a new trade agreement would address fruit and vegetable issues, Powers said.
“What exactly the objective is — other than the interest on the part of the administration to address the trade deficit — is not clear to me,” he said Aug. 8.
If the agreement did open up negotiations on agriculture, Powers said the Northwest Horticultural Council will urge U.S. negotiators to look at U.S. apple access.
Powers said commodity-specific phytosanitary issues are typically not included in free trade negotiations.
“When (the U.S.) was originally negotiating the free trade agreement with Korea, we asked that they include apple access as one of their priorities, but it didn’t occur.”
