What's the Background?
The United States and South Korea signed the KORUS FTA on June 30, 2007, and the agreement took effect in March 2012, giving the United States access to Korea’s trillion-dollar economy and its more than 51 million consumers. Prior to KORUS taking effect, U.S. pork exports to South Korea were subject to significant tariffs of 25 percent on frozen pork product and 22.5 percent on fresh and chilled pork product. But under KORUS, South Korean import duties on most U.S. pork cuts of commercial significance were lowered to zero on Jan. 1, 2016.
Why Does it Matter to our Producers?
The United States over the past 10 years, on average, has been the top exporter of pork in the world; it is the globe’s lowest-cost producer of pork. In any given year, the U.S. pork industry ships product to more than 100 countries. Exports contribute significantly to the bottom line of all U.S. pork producers, adding more than $50 to the value of each hog marketed in 2016, when $5.9 billion of U.S. pork was exported.
• U.S. Pork Exports to South Korea: For the first ten months of 2017 U.S. pork exports have surpassed those in 2016.The United States exported more than 136,000 metric tons of pork valued at $ 372million to South Korea, making it the No. 5 export market for U.S. pork. Compared with 2016, when U.S. pork exports to South Korea totaled more than 135,000 metric tons valued at more than $365 million.
• Consequences of Withdrawing from KORUS: Reverting to pre-KORUS tariffs would be very harmful to U.S. pork producers. The U.S. pork industry likely would lose the South Korean market to its largest competitors that have current FTAs with Korea, including Australia, Canada, Chile and the European Union. U.S. live hog prices would fall by 3.8 percent, or by $4.71 an animal, and that decrease would all but eliminate U.S. producers’ expected gross margin per animal in 2017, according to Iowa State University economist Dermot Hayes.
What's NPPC's Position?
The Korea-U.S. (KORUS) Free Trade Agreement has been a success for U.S. pork producers. The U.S. pork industry must maintain market access to Asia’s fourth largest economy; any disruption in sales to South Korea will cause disastrous financial harm to U.S. pork producers.