US beef exporters urge speed, not changes, in South Korean trade accord
Bloomberg | Nov 10, 2010
US beef exporters urge speed, not changes, in South Korean trade accord
By Mark Drajem
American beef exporters are pushing the Obama administration and Congress to approve a pending trade agreement with South Korea without delay rather than hold out for concessions on their behalf.
U.S. exports of beef are up 175 percent in the first eight months of this year to $331 million, regaining sales that collapsed following concern about mad-cow disease that sickened animals in 2003, according to Commerce Department data. Australia and Canada are pursuing their own free-trade agreements with South Korea, and their suppliers may gain on U.S. producers, according to the American Meat Institute.
“The market is coming back and it would be a shame to lose this opportunity,” said William Westman, vice president for international trade at the Washington group, which represents companies such as Tyson Foods Inc. and Cargill Inc. American exporters “don’t want to be put at a disadvantage to our competitors.”
President Barack Obama is to meet South Korea President Lee Myung Bak in Seoul tomorrow, and both sides are aiming to wrap up talks on the agreement before then. Beef is one of the two issues that U.S. Trade Representative Ron Kirk said must be renegotiated before the agreement, which has languished since being signed in 2007, can be sent to Congress. Kirk hasn’t said what changes he is seeking.
The U.S. is also aiming to secure pledges to open the Korean auto market to American-made cars. Negotiations between Kirk and Kim Jong Hoon, the Korean trade minister, are to resume today in Seoul, according to a statement yesterday from Kirk’s office.
Beef protests
U.S. beef has become a political issue in Korea, and Lee had to apologize in 2008 after agreeing to allow imports, which triggered candlelight vigils by tens of thousands of people concerned about food safety. The protests prompted U.S. producers to limit exports to cows that are younger than 30 months, which may have a lower risk for mad-cow disease.
More than 90 percent of U.S. beef exports come from cows younger than 30 months, according to the National Cattlemen’s Beef Association, based in Centennial, Colorado.
While the beef industry is pushing for quick approval of the accord, Senator Max Baucus, a Montana Democrat and chairman of the Finance Committee, has said the free-trade agreement, or FTA, can’t win approval by Congress unless the 30-month cap is removed.
“No deal is better than a bad deal,” Baucus told Kirk at a congressional hearing on Aug. 6. “I don’t know why I should schedule a hearing on a Korean FTA that does not include all beef, all ages, all cuts,” Baucus said.
A spokesman for Baucus didn’t return e-mail and telephone messages yesterday seeking comment on the talks.
Delay, backlash
Beef producers are worried that pushing for such a pledge may mean a delay for the overall agreement, or a backlash among Korean consumers who will spurn U.S. beef, said Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics in Washington.
“From the point of view of the U.S. beef exporters, it’s a no-brainer” to get the deal done, said Schott, who traveled to Seoul in recent weeks to meet Korean officials. “This doesn’t seem like it’s worth blowing up the deal over.”
Once the agreement goes into effect, Korea will phase out its 40 percent duty on beef imports, cutting it by 2.5 percent a year for 15 years, Westman said.
If the U.S. agreement takes effect before Korea finishes deals with Canada and Australia, it would give American producers an advantage for 15 years, he said. If not, producers in those countries would get a head start on the tariff cuts.
Accord ‘done now’
“As far as the priority, let’s get the free-trade agreement done now,” Westman said at a forum in Washington on Oct. 19.
U.S. beef exports to Korea are on course to exceed $500 million this year, more than double last year’s total of $208 million, according to Commerce data. In 2003, the exports totaled $742 million, making Korea the third-largest export market after Japan and Mexico.
The South Korea accord is the biggest for the U.S. since the 1994 North American Free Trade Agreement, and the Obama administration’s stated goal of completing it is being watched as a signal about whether the U.S. is capable of getting trade deals approved by Congress, according to William Reinsch, president of the National Foreign Trade Council in Washington.
Companies such as Citigroup Inc., United Parcel Service Inc. and Ace Ltd. say the deal will help open the Korean market to more U.S. exports and foreign investment in financial services.
