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

Other Vegetables 162
Assessment
The U.S.-Korea FTA would likely result in increased U.S. exports of a number of fresh and
processed (i.e., frozen, dried, and canned) vegetables 163 to Korea, especially in the near term,
although export volumes and associated tariffs vary considerably by commodity. 164 U.S.
global exports of most of these items generally have accounted for a small share of U.S.
production and sales, as well as a small share of Korean consumption, but under an FTA
U.S. domestic production and Korean-market sales are expected to increase. The Korean
vegetable market is described as a sizeable, lucrative, and expanding market where
commodity prices are considered high, but consumers have shown a willingness to pay
premium prices for high-quality U.S. products. 165 Consequently, this market offers
significant potential for expanded U.S. fresh- and processed-vegetable exports. 166
Korean duties on the U.S. fresh and processed vegetable products currently range from
5 percent ad valorem on some canned tomato products to 607.5 percent for some dried
beans. 167 Duties on nearly all of these items would be phased out over 2 to 3 years, 168 but
some of these items subject to TRQs. Global competition in the Korean market for U.S. sales
of these vegetables is coming primarily from China but also from Chile. China, supported
by its very large community-based vegetable production areas and its close proximity and,
consequently, lower shipping costs to the Korean market, already accounts for nearly all
Korean imports of certain vegetables and products. China is also likely to become an even
greater supplier of vegetables to Korea in the future, 169 especially in light of its recent
partnership with the Association of Southeast Asian Nations (ASEAN) to form an
ASEAN+3 trade group. 170 For those U.S. products currently competing in the Korean market
with products from Chile, which already benefit from an FTA with Korea, U.S. producers
stand to gain parity with Chile as a result of the U.S.-Korea FTA. 171 Tariff liberalization on
many fresh and processed vegetables would provide a near-term competitive advantage for
162 The products covered in this assessment represent approximately 6 percent of U.S. exports to Korea in
the GTAP “vegetables, fruit, nuts” and approximately 3 percent of 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.” and “vegetable,
fruits, nuts” sectors, for 2006.
163 Included here are fresh, frozen, and canned sweet corn (HTS 0709.90.45, 0710.40, and 2005.80),
canned tomatoes and products (2002.10 and 2002.90), other fresh vegetables (onion sets, onions, and shallots
[0703.10.20 and 0703.10.50]), lettuce (0705.11 and 0705.19), carrots (0706.10.30), other dried vegetables
and mixtures of dried vegetables (0712.90.9002), dried leguminous vegetables (0713.10, 0713.20, 0713.31,
0713.32, and 0713.39), and other processed, frozen vegetables and mixtures of vegetables (2004.90.8580).
164 One industry study states that U.S. agricultural exports to Korea under an FTA would expand
substantially, and that exports from California alone could more than double their current amounts within a
few years. Lee and Sumner, “The Prospective Free Trade Agreement with Korea,” January 2007, 1.
165 Lee and Sumner, “The Prospective Free Trade Agreement with Korea,” January 2007.
166 Ibid.
167 The items covered here, together with their Korean MFN applied duties, are as follows: fresh onions
(135 percent; fresh garlic (360 percent), fresh lettuce (45 percent), fresh carrots (40.5 percent), other dried
vegetables (27 percent), dried peas and chickpeas (27 percent each), dried mung beans (607.5 percent), dried
small red beans (420.8 percent), dried kidney beans and other dried beans (27 percent each), other frozen
vegetables (30 percent), and canned olives (20 percent).
168 For canned tomatoes and tomato products and other frozen or processed vegetables and mixtures of
vegetables, duties are scheduled to be phased out over 3 years.
169 Lee and Sumner, “The Prospective Free Trade Agreement with Korea,” January 2007.
170 CRS, “The Proposed South Korea-U.S. Free Trade Agreement (KORUS FTA),” April 23, 2007, 6.
171 Lee and Sumner, “The Prospective Free Trade Agreement with Korea,” January 2007.
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