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

The National Association of Wheat Growers and the U.S. Wheat Associates indicated in a
joint statement on June 25, 2007, that their two trade groups support the Korean FTA. They
wrote that “the zero bound duty under this FTA, coupled with Korea’s strong economic
growth, will help U.S. wheat growers capture a larger share of this [Korean] market.” 17 They
noted that the FTA establishes a committee on agriculture and one on SPS matters, and a
bilateral dispute settlement process giving U.S. officials vital new forums for negotiation
with Korea on standards-related barriers to U.S. exports, including wheat.
The National Corn Growers Association (NCGA), which represents more than 32,000 U.S.
corn growers from 48 states and 26 affiliated state corn organizations, 18 noted that Korea is
one of the United States’ largest corn markets and represents a potentially large market for
corn coproducts, such as distillers’ dried grains with solubles (DDGS). 19 The association also
said that the U.S.- Korean FTA would remove trade barriers and create new export
opportunities for U.S. corn growers. It reported that improvements in market access in Korea
for U.S. corn and corn coproducts are positive and that any gains in additional U.S. meat
market access to Korea would also benefit U.S. corn growers as a significant amount of corn
ends up as livestock feed in the United States.
Oilseed Products (Soybeans and Soybean Oil) 20
Assessment
The U.S.-Korea FTA would likely to have a significant positive impact on U.S. oilseeds
exports to Korea. Estimates from the Commission’s economy-wide analysis of the long-term
effects of tariff and TRQ liberalization indicate that exports in the oilseed, and vegetable oils
and fats sectors (of which the products included here represent a large component) could
increase by 5–11 percent for oilseeds and 20–33 percent for vegetable oils and fats. 21 Based
on existing current export patterns and trends, approximately half of the expected additional
U.S. oilseed product exports to Korea would likely consist of food-grade soybeans, and most
of the other half would be soybean oil.
16 (...continued)
Feed Annual 2002,” April 1, 2002, 1–2. For additional analysis regarding SPS and other NTMs, see chap. 5
of this report.
17 U.S. Wheat Associates, Wheat Letter, June 28, 2007, 5.
18 National Corn Growers Assoc., “U.S.-Korea FTA Highlights Access and Beef Concerns
(April 3, 2007).” Washington, DC, NCGA, 2007.
19 DDGS are a feed ingredient which is a coproduct of dry mill ethanol production from grains.
20 Includes HTS headings 1201 and 1507. The oilseed sector focuses on soybeans and soybean oil,
although the FTA also addresses other oilseeds such as cottonseed, sunflower seed, and other vegetable oils
whose trade with Korea is negligible. Soybeans are crushed into soybean oil (for cooking oil) and soybean
meal for livestock feed in Korea; edible-grade soybeans are used directly in food as well in Korea. The
products covered in this assessment represent approximately 88 percent of U.S. exports to Korea in the
GTAP “oilseeds” sector and approximately 53 percent of U.S. exports to Korea in the GTAP “vegetable oils
and fats” sectors, and represent approximately 67 percent of U.S. imports from Korea in the GTAP
“oilseeds” sector and approximately 1 percent of U.S. imports from Korea of the GTAP “vegetable oils and
fats” sector, for 2006.
21 Impact relative to an estimated 2008 base. See chap. 2 of this report for additional information
regarding the economy-wide analysis.
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