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

The Wine Institute and the CAWG stated that they supported throughout the negotiation
process the immediate duty-free access to the South Korean market upon implementation for
wine (HTS 2204, 2205, and 2206) and grape juice concentrate (HTS 2009.61 and 2009.69).
Overall, the FTA will greatly enhance the competitive position of U.S. winemakers in South
Korea’s extremely promising market, leading to large potential gains for the U.S. wine
industry. The Wine Institute and the CAWG estimate that within a year of implementation
of the FTA, exports will have grown by 150 percent relative to 2006 levels, and sales will
total over $31 million, and that by 2012, 5 years after the agreement, exports will have
grown by 480 percent, and sales will total over $72 million.
They described Korea as a rapidly developing market for U.S. wine exports, and said it has
potential for substantial growth. The market for wine in South Korea has grown by
283 percent in the past 5 years, and that wine consumption is growing by about 19 percent
per year. They noted that U.S. wine exports to Korea currently face a tariff rate of 15 percent
for wine and 45 percent for grape juice concentrate. The Chilean share of Korea’s wine
market has grown from about 4 percent in 2004, when the Chile-South Korea FTA was
signed, to 17 percent, while the U.S. share has remained constant at about 14 percent. They
added that Chile is also increasing its share of the Korean grape juice market at the expense
of U.S. producers as a result of its preferential duty treatment in the Korean market. The U.S.
duty rates on both wine and grape juice concentrate would immediately fall to free upon
implementation of the FTA, making U.S. exports more competitive in the Korean market.
The Wine Institute and the CAWG stated that the effect of the FTA on the U.S. wine
industry will be significant and extremely positive and that the FTA will help U.S. wine
exporters compete with their Chilean counterparts. This will improve the competitive
position of U.S. wines in the Korean market and enable the U.S. wine and grape juice
concentrate industries to solidify their positions in Asian markets.
7-34