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

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Table 3.2 U.S. oilseed product exports to and market access in Korea Product 38 ATAC for Grains, Feed and Oilseeds, Advisory Committee Report, April 25, 2007. 39 American Oilseed Coalition, letter to Congress in connection with the U.S.-Korea Free Trade Agreement, July 12, 2007. U.S. exports to Korea Korean market access a 2002–06 average a 2006 3-8 Applied rate, a 2006 First year TRQ Over-quota tariff (1,000 metric tons) (Percent AVE) (1,000 metric tons) (Percent AVE) Soybeans for crushing 702 314 1 None Free Soybeans for food 244 212 5 10 Soybean oil: crude 37 49 c 4.7 +5.4 None Free Soybean oil: refined 2 0.1 5.4 None Free Source: USTR, “Final - United States - Korea FTA Texts,” 2007, Tariff Schedule of Korea, Appendix 2-B-1; Global Trade Information Services, World Trade Atlas Database; official statistics of the U.S. Department of Commerce; USDA, FAS, “Korea Oilseeds and Products Annual 2007,” February 26, 2007; and USDA, FAS, “Korea Oilseeds and Products Korean Soybean Oil Antidumping Petition Preliminary Determination 2007,” April 2, 2007. a Calendar year, January 1 to December 31. b The Korean importing STE will continue to charge an additional $250 per ton mark-up fee on above-quota imports. c The 2006 duty treatment for crude U.S. soybean oil included a 4.7 percent antidumping duty. Views of Interested Parties According to the report of the ATAC for Grains, Feed, and Oilseeds, the majority of its members endorse the FTA, because of the benefits expected to be realized by most U.S. producers of oilseeds. 38 According to the report, “in summary, Korea is a large and important market for soybeans, soybean meal and soybean oil, and the tariff reduction will help the United States achieve market share versus tough competitors such as Argentina and Brazil.” The report also states that allowing the Korean private sector to import food-grade soybeans may open the door for sizable imports of U.S. food-grade soybeans in the future. The American Oilseed Coalition (composed of the American Soybean Association, the National Cottonseed Products Association, the National Oilseed Processors Association, the National Sunflower Association, and the U.S. Canola Association) indicated in a letter to Congress that it strongly supports the FTA between the United States and Korea. 39 In the Coalition’s letter, it noted that because of lower cost competition from China and South America, the United States is not currently a major exporter of soybean meal or soybean oil to Korea, but states that the FTA offers an opportunity to improve the U.S. competitive export position in Korea. The letter notes that, moreover, Korea’s tariff on soybean meal will be eliminated immediately under the FTA; its tariffs on soybean oil phased out in 5 to 10 years; and U.S. food-grade soybean will have access to the South Korean market outside the STE import monopoly. b 5
Animal Feeds 40 Assessment The U.S.-Korea FTA would likely result in increased overall U.S. exports of animal feeds to Korea. The increase, however, is unlikely to have a significant effect on U.S. soybean meal exports because the modest tariff reduction would not likely improve U.S. competitiveness substantially. The U.S. soybean-crushing industry could experience relatively greater benefit from improved market access for U.S. meat exports to Korea under the FTA as these increased exports would generate greater domestic demand for meal consumption. Other animal feeds, such as prepared feeds, pet foods, and DDGS, should experience relatively greater export gains as the United States is already a leading supplier to Korea and this competitive position should be further enhanced through the immediate removal of almost all of these tariffs under the FTA (table 3.3). As a result of its small arable land mass, Korea is very dependent on imports of animal feed for its domestic livestock and poultry sectors, which have grown significantly as Korean consumption patterns have changed over the past several decades as a result of increased affluence. According to the USDA, Korea’s consumption of beef, pork, and poultry each has increased in the range of 100 to 400 percent during the period 1990–2006. 41 USDA projects continued increases in Korea’s consumption of these meats, in the range of 14 to 47 percent over the period 2007 through 2016, which would further increase the demand for imported animal feeds. 42 Soybean meal 43 is the leading vegetable protein source used in the manufacture of compound animal feeds in Korea. 44 Soybean meal imports from the United States have been relatively small and have declined 24 percent since 2002 (table 3.3) as imports from Argentina, Brazil, and India have become increasingly price competitive (table 3.4). The removal of a 1.8 percent tariff as a result of the FTA is unlikely to significantly improve the price competitiveness of the United States compared to these competing suppliers. Of greater potential importance is the effect of increased market access for U.S. meat exports to Korea. Increased meat exports and production would likely increase the use of U.S.-produced soybean meal as livestock feed, which accounts for 98 percent of total domestic soybean meal consumption in the United States. 45 40 Products of chap. 23 of the HTS. This assessment will cover the leading U.S. exports to Korea for this chapter, which include soybean meal, mixed feeds, pet foods, and distiller’s dried grains with solubles (DDGS). The products covered in this assessment represent approximately 27 percent of U.S. exports to Korea in the GTAP “vegetable oils and fats,” approximately 10 percent of U.S. exports to Korea in the GTAP “beverages and tobacco products,” and approximately 5 percent of U.S. exports to Korea in the “food products n.e.c.” sectors, and represent less than 1 percent of U.S. imports from Korea in the GTAP “food products n.e.c.” sector, for 2006. 41 USDA, FAS, “Production, Supply, and Distribution Online.” 42 USDA, WAOB, “USDA Agricultural Projections to 2016,” February 2007. 43 HTS 2304.00 Oil cake and other solid residues, whether or not ground or in the form of pellets, resulting from the extraction of soybean oil. 44 USDA, FAS, “Korea Oilseeds and Products Annual 2007,” February 26, 2007, 20. 45 USDA, ERS, “Briefing Room on Soybeans and Oil Crops—Background.” 3-9
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U.S. International Trade Commission
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This report was prepared principall
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CONTENTS-Continued Chapter 3. Secto
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CONTENTS—Continued Chapter 5. Imp
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CONTENTS-Continued Chapter 7. Liter
Page 12 and 13: CONTENTS-Continued Tables—Continu
Page 15 and 16: Abbreviations and Acronyms 3G third
Page 17 and 18: Abbreviations and Acronyms—Contin
Page 19: Abbreviations and Acronyms—Contin
Page 22 and 23: vehicles) would likely be diverted
Page 24 and 25: Sector-specific Assessments The U.S
Page 26 and 27: total increased fish imports from K
Page 28 and 29: Korea would likely limit the impact
Page 30 and 31: Intellectual property rights (IPR):
Page 32 and 33: sector barriers. 5 These merchandis
Page 34 and 35: Table 1.1 U.S.-Korea FTA: Location
Page 36 and 37: Table 1.2 Korean tariff rates on im
Page 38 and 39: Table 1.4 U.S.-Korea FTA: Summary o
Page 40 and 41: observed GDP for model regions). Th
Page 42 and 43: Box 2.1 Interpreting the model resu
Page 44 and 45: Table 2.1 U.S.-Korea FTA: Simulated
Page 46 and 47: 2-8 This page has been updated to r
Page 48 and 49: Figure 2.2 U.S-Korea FTA: Simulated
Page 50 and 51: As shown in figure 2.2, the largest
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Page 54 and 55: Economy-wide Impact of Implementing
Page 56 and 57: Grain (Wheat, Corn, and Other Feed
Page 58 and 59: Korea imported 3.8 million mt of wh
Page 60 and 61: U.S. oilseed product exports to Kor
Page 64 and 65: Table 3.3 Animal feed exports to Ko
Page 66 and 67: consumed domestically by the U.S. l
Page 68 and 69: ates. For corn starch, the United S
Page 70 and 71: quota rates have been effectively e
Page 72 and 73: Noncitrus Fruit 87 Views of Interes
Page 74 and 75: 3-20 Table 3.9 U.S.-Korea trade and
Page 76 and 77: Korean grapes are much more costly
Page 78 and 79: Potato Products 122 Assessment The
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Page 82 and 83: Other Vegetables 162 Assessment The
Page 84 and 85: U.S. exports of other fresh and pro
Page 86 and 87: tariff concessions that could accru
Page 88 and 89: Dairy Products 215 Similarly, the p
Page 90 and 91: TRQ for food whey, 223 based on cur
Page 92 and 93: potential changes in trade based so
Page 94 and 95: Figure Figure 3.1 Korea: Beef and v
Page 96 and 97: Views of Interested Parties The inc
Page 98 and 99: are subject to the same food safety
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Page 102 and 103: Box 3.2 Potential price and quantit
Page 104 and 105: 50 percent, while the vegetable jui
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Page 110 and 111: U.S. Exports The impact of the FTA
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passage. NCTO indicated that, even
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In its report, the ITAC on Distribu
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of the U.S. footwear market, with C
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of these producers. 362 RPFMA noted
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prohibit improper inducements by ph
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Machinery, Electronics, and Transpo
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U.S. exports of auto parts would be
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imports from and exports to Korea.
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Passenger Vehicles 433 Assessment U
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Table 3.16 Korean passenger vehicle
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import activities have continued
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Box 3.4 Automotive-related FTA Prov
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access. The FTA affirms the parties
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gaining U.S. market share regardles
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keep the products out.” 492 Mr. B
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these vehicles to Korea. The commit
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Brown expressed concern about the r
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goods; and high-technology medical,
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device pricing, reimbursement, and
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CHAPTER 4 Impact of Market Access P
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elative to GDP than do China, Japan
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services as a substantial improveme
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Box 4.2 Financial services: Competi
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Summary of Provisions Chapter 13 of
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national treatment, full establishm
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Box 4.4 Competitive conditions in t
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and cross-connect links 70 are more
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Box 4.5 U.S. legal services trade w
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establish offices in Korea to provi
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Box 4.6 Competitive conditions in t
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equirements and foreign ownership r
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CHAPTER 5 Impact of Trade Facilitat
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publication and administration of t
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Views of Interested Parties In its
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Summary of Provisions This chapter
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use of TBTs to protect Korea’s au
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conformity assessment procedures el
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FTA Chapter 15-Electronic Commerce
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Views of Interested Parties The U.S
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quantities as to be a substantial c
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that such transshipment could imped
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Box 6.1 Foreign investment in Korea
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in the FTA. The awards made by any
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Table 6.1 U.S.-Korea FTA: Industry
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(ITAC 5) report cited as particular
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Section C of Chapter 11 and the lac
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practices, and violations of consum
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FTA Chapter 17—Government Procure
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Both the United States and Korea ar
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8) 87 also expressed support for th
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Box 6.2 Recent conditions of IPR pr
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protection to life of the author pl
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Views of Interested Parties A numbe
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GPHA stated in testimony before the
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Box 6.3 Labor market conditions in
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FTA Chapter 20—Environment 131 As
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trade measures are the least disrup
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FTA Chapter 22-Institutional Provis
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Views of Interested Parties The Ind
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CHAPTER 7 Literature Review and Sum
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7-3 Table 7.1 Model, liberalization
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terms. Much of the increase in U.S.
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Liberalization generated small incr
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Sander Levin, Member of the U.S. Ho
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Regarding footwear and travel goods
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Korea’s establishment as a region
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The California Table Grape Commissi
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order activity, and facilitate expa
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At the Commission’s hearing, Mr.
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Information Technology Industry Cou
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With respect to tariff and nontarif
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deterring illegal transshipments. I
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PhRMA identified what it views as t
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the TIA stated that it supports the
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access to the market. The Council a
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United States, Spain, Chile, Brazil
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Bibliography Advanced Medical Techn
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AT&T. “AT&T Reaction to Free Trad
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______. “Korea-U.S. Free Trade Re
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______. “Country Finance: South K
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Global Trade Information Services I
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International Labor Organization (I
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Jones, Laura E. Executive Director.
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Lee, Hyunok, and Daniel A. Sumner.
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Nam, In-Soo. “Helio's Losses To W
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Powers, Mark. Northwest Horticultur
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Smith, Brad. American Council of Li
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U.S.-Korea Business Council (USKBC)
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______. “Korea, Republic of Oilse
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U.S. International Trade Commission
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Ward, David. American Council on Ed
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APPENDIX A Request Letter from USTR
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APPENDIX B Federal Register Notices
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pwalker on PROD1PC71 with NOTICES 2
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APPENDIX C Hearing Participants
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ORGANIZATION AND WITNESS: PANEL 1 (
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APPENDIX D U.S.-Korea FTA: Chapter-
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fees and charges on trade in goods
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determines the tariff classificatio
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The transparency provisions would a
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necessary duties within 1 year of i
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technical regulation or conformity
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procedures), and practices of a par
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aviation, fisheries, or maritime ma
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of standards and criteria and on te
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of the FTA that impose unilateral o
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use of electronic authentication in
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parties’ rights and obligations u
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establishment of Uniform Domain-Nam
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government to take appropriate meas
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environmental laws. 102 In the U.S.
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not limited to, policies on commerc
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Economic indicators 2002 2006 Popul
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Table E.1 Leading U.S. exports to K
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APPENDIX F GTAP Model
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Updating the GTAP Database The curr
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Key Assumptions Agency. 4 The price
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Table F.2 U.S.-Korea FTA benchmark
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Measuring the Impacts of the FTA an
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General Effects of Trade Agreements
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APPENDIX H Tariff Equivalents in Ko
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Previous Literature The method for
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For the purposes of this report, a
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Table H.1 Tariff equivalents in Kor
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APPENDIX I Services Nonconforming M
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Table I.1 U.S.-Korea FTA: Korean se
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APPENDIX J Description of Possible
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are in effect import prices, and th
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APPENDIX K Overview of Agricultural
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Additionally, although current regu
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About This Report The United States
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