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

Starches 60
The National Corn Growers Association (NCGA) 58 stated that the FTA will create new
export opportunities for U.S. exports of corn and coproducts, with DDGS likely to see
significant growth because of the potential for greater usage in feed rations and rapidly
increasing production in the United States. The NCGA reported that it is pleased that the
FTA is expected to increase U.S. pork exports to Korea, but noted that the FTA would not
result in reopening the Korean market to U.S. beef exports. Pork and beef represent large
consuming sectors for corn and coproducts.
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 that
it strongly supports the FTA. 59 It states that the United States is not currently a major
exporter of soybean meal or soybean oil to Korea because of lower cost competition from
China and South America, but that the FTA offers an opportunity to improve the U.S.
competitive export position in Korea. The Coalition notes that Korea’s tariff on soybean
meal will be eliminated immediately under the FTA; its tariffs on soybean oil will be 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. The Coalition also views the market access gains
in the FTA for livestock products such as pork, poultry, and dairy as equally important to the
oilseed industry because all of these products use protein meals derived from U.S. oilseed
crops.
Assessment
Unmodified Starches 61
The U.S.-Korea FTA would likely result in significantly greater U.S. exports of unmodified
starches to Korea. Unmodified corn starch would likely experience increased exports in the
short term, as the United States would receive immediate duty-free access for a relatively
large volume of exports. Because of relatively smaller volumes of duty-free access, as well
as TRQs and safeguard measures, near-term U.S. exports of other unmodified starches
(wheat, potato, and cassava) to Korea would likely be constrained until these impediments
are eventually eliminated over a 15-year period after FTA implementation.
In Korea, corn starch is the dominant starch produced, followed by sweet potato starch. 62
Korea’s leading starch import sources are China (corn and other starches) and Germany
(potato), with the United States as a relatively smaller supplier of starches. Korea presently
maintains very high duties on starch imports and TRQs with prohibitive over-quota tariff
58 National Corn Growers Assoc., “U.S.-Korea FTA Highlights Access and Beef Concerns
(April 3, 2007).” Washington, DC: NCGA, 2007.
59 American Oilseed Coalition, letter to Congress in connection with the U.S.-Free Trade Agreement,
July 12, 2007.
60 The products covered in this assessment represent less than 1 percent of U.S. exports to Korea and U.S.
imports from Korea in the GTAP “food products n.e.c.” sector, for 2006.
61 This assessment is for starches in Harmonized System (HS) chap. 11 that are products of the milling
industry. Dextrins and other modified starches found in HS chap. 35 are not included in this assessment.
62 Fuglie and Oates, “Starch Markets in Asia,” March 26–27, 2002, 3.
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