U.S.-Korea Free Trade Agreement: Potential Economy-wide ... - USITC

chapter 21 (miscellaneous food) have MFN tariffs ranging from 5 to 754 270 percent (mostly
8 or 18 percent). These tariffs would be eliminated in 5 or 10 years under the FTA, and none
is subject to TRQs or safeguards. 271 Consequently, the tariff eliminations of the FTA should
improve the competitive position of the United States against China, the EU, and Japan once
they are fully implemented. In addition, implementation of the FTA should support the U.S.
processed food industry’s ability to continue to capture some of the growing demand in
Korea.
As shown in the Views of Interested Parties below, industry representatives have expressed
concerns regarding the adverse effect of NTMs on U.S. exports to Korea. An analysis of
international price and quantity data comparing Korean imports to comparable countries
indicates that the potential effect of NTMs on Korean imports may be to restrict the quantity
of imports or raise the price of imports for a variety of processed foods (box 3.2).
Implementation of the TBT provisions of the FTA will likely be critical to fully realizing
these gains in market access.
Views of Interested Parties
In its report on the agreement, the ATAC for Trade in Processed Foods stated that it supports
the FTA. It noted that more than one-half of the current U.S. food and agriculture exports
to Korea will become immediately free of duty, including a wide variety of processed
products, while many others are subject to a relatively short 5-year tariff phaseout period.
The report notes that U.S. exporters of many processed food products could see the benefits
of tariff removal under the FTA negated by continued TBTs not addressed in the
negotiations. Specifically, the report mentioned that Korea does not allow the use of several
food additives that are approved by the U.S. Food and Drug Administration and are
commonly used in U.S. processed foods. Consequently, food products containing such
additives would continue to be denied access to Korea, despite having their tariffs
eliminated. 272
A spokesperson for the Grocery Manufacturers Association and the Food Products
Association (GMA-FPA), a trade association representing firms in the food, beverage, and
consumer packaged goods industry, stated that the association is generally supportive of the
FTA, as Korea is an important market for many of the producers it represents. 273 For tariffs,
she noted that certain products of member companies will benefit greatly from Korea’s rapid
duty elimination in such products as frozen french fries, grape juice, and orange juice, while
other products such as tomato ketchup, peanut butter, popcorn, and dairy products will
benefit relatively less because of duty eliminations lasting several years. Prior to the
negotiations, she stated that the association noted several NTMs for processed foods as
hindering. 274 The association added that it is pleased that the U.S. emphasized the importance
270 Food preparations n.e.c. (red ginseng tea, HTS 2106.90.3021) has an MFN rate of 754 percent.
271 USTR, “Final - United States - Korea FTA Texts,” 2007.
272 ATAC for Trade in Processed Foods, Advisory Committee Report, April 27, 2007.
273 Peggy S. Rochette, senior director of International Policy, GMA-FPA, interview by Commission staff,
Washington, DC, June 27, 2007.
274 Rochette, “Public Comments Regarding Proposed Free Trade Agreement with the Republic of Korea,”
written submission to the Trade Policy Staff Committee, Office of the USTR, March 23, 2006.
3-47