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

of these NTMs during the FTA negotiations. She stated that GMA-FPA views the SPS and
TBT chapters of the FTA as “a step in the right direction,” as they establish a forum for
discussing NTMs, but noted that GMA-FPA remains concerned about Korea’s current food
regulatory system with respect to labeling, food standards, customs procedures, notification
of regulation changes, and transparency of regulations. She added that it “remains to be
seen” whether the SPS and TBT chapters will be able to fully address these concerns.
A spokesperson for the Campbell Soup Company, the world’s largest producer of soups and
a major manufacturer of branded cookies, snack foods, mixed vegetable juices, and sauces,
stated that the company is pleased with the FTA as it will phase out tariffs on most of its
products over 5 years. 275 He noted that this eventual duty-free access would provide a
significant competitive advantage for U.S. exports over comparable products manufactured
in the EU and Japan.
The California Tomato Growers Association, a farmer-owned cooperative for growers of
processing tomatoes, stated that it supports the elimination of tariffs on processed tomato
products, including tomato ketchup, in the FTA. 276 The association reported that this
elimination of tariffs could result in an estimated annual sales increase of up to $15 million
for the California processed tomato industry. It noted, however, that Korea’s labeling
requirements and import clearance process can still affect trade despite the tariff
eliminations; the association underscored that enforcement of the TBT and SPS provisions
of the FTA will be necessary for the full benefits to increased exports to be realized.
Nonalcoholic Beverage Products 277
Assessment
The U.S.-Korea FTA provisions for nonalcoholic beverage products would likely have a
significant impact on U.S. exports. Exports of a number of U.S. beverage products, including
grape juice and orange juice (including frozen concentrated orange juice [FCOJ]), would
enter Korea free of duty upon FTA implementation. Tariffs on other products, such as
vegetable juices, would be phased out over 5 years. 278
The current Korean MFN rate for FCOJ is 54 percent, while single-strength orange juice is
currently dutiable at 30 percent. For most other fruit juices, the applied MFN rate is
275 Kelly Johnston, Vice President, Government Affairs, Campbell Soup Company, e-mail messages to
Commission staff, June 26, 2007.
276 California Tomato Growers Assoc., “Public Comments,” written submission to the Trade Policy Staff
Committee, Office of the USTR, n.d.
277 Nonalcoholic beverages include beverage products are found in HTS chaps. 20, 21, and 22, with the
exception of beverage products containing alcohol. Fruit juices are found in chap. 20, with the exception of
juice products with added vitamins or other nutrients, which are found in chap. 21, and fruit drinks that are
fruit juices with less than 100 percent juice, which are found in chap. 22. Bottled water and carbonated
beverages, including those sweetened with artificial sweeteners are found in chap. 22, as are sports drinks,
ice teas, milk-containing drinks, and “functional” beverages. The products covered in this assessment
represent approximately 33 percent of U.S. exports to Korea in the GTAP “beverages and tobacco products”
and approximately 4 percent of U.S. exports to Korea in the GTAP “food products n.e.c.” sectors, and
represent approximately 33 percent of U.S. imports from Korea in the GTAP “beverages and tobacco
products” and less than 1 percent of U.S. imports from Korea in the GTAP “food products n.e.c.” sectors, for
2006.
278 ATAC for Trade in Processed Foods, Advisory Committee Report, April 27, 2007.
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