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

U.S. exports of other fresh and processed vegetables would likely increase as a result of tariff
elimination and trade-barrier removal under the FTA. Gains would be tempered, however,
by small duty-free in-quota TRQ quantity increases that would be phased in over 10 or more
years and be accompanied by very large over-quota duties. 180 In the Korean fresh-vegetable
market sector, the United States has maintained a 5-percent market share in recent years. 181
Driven by increasing demand, U.S. exports of lettuce have been rising in recent years despite
the high 45 percent tariff, mainly because U.S. lettuce exports enter during the Korean offseason
for field-grown lettuce, when Korean-produced lettuce is a high-priced, greenhousegrown
product. 182
Other U.S. products are believed to be price competitive in the Korean market with other
imports and with vegetables produced locally. In some cases, little or no competition exists
for some U.S. vegetables. 183 Korean consumers may be more likely to purchase certain fresh
vegetables such as artichokes and asparagus not customarily consumed in Korea because of
their appeal as healthy foods and their falling prices as duties are eliminated. 184 Demand for
other foods, such as canned pickles or pickled relish, has fallen in recent years as consumers
look to new and different foods. 185 Also, for items such as canned olives, where Spain and
Italy recently accounted for 76 percent and 14 percent, respectively, of Korean consumption,
the FTA would not be likely to boost U.S. exports. 186
Even with the elimination of duties and other barriers under the FTA, U.S. products would
face a number of obstacles to gaining greater share of the Korean market. Some of the fresh
vegetables covered here are perishable (i.e., fresh sweet corn, onions, lettuce, and carrots),
and success in exporting these products to Korea may be limited by the costs and logistics
involved in keeping the products refrigerated during transport to Korea. In addition,
increased U.S. exports of fresh and processed vegetables may continue to be subject to
TBTs, quotas, licensing requirements, and SPS measures. 187
The FTA would unlikely significantly affect U.S. vegetable imports from Korea. Korean
vegetable exports have little potential for expansion in light of the large number of small
farms and the shrinking share of the Korean economy held by agriculture. 188 Consequently,
the elimination of high U.S. duties on a number of products (e.g., fresh garlic, certain fresh
root crops, and other miscellaneous fresh vegetables) may create incentive for Korean
exporters, but is unlikely to result in greatly increased U.S. imports. Canned mushrooms,
however, could increase if Korean producers were to modernize mushroom-growing and
canning facilities, although Korean sales in the U.S. market would have to compete with
180 Included here are onion sets and other onions (HTS 0703.10.20 and 0703.10.50), lettuce (0705.11 and
0705.19), carrots (0706.10.30), dried leguminous vegetables (0713.10-0713.39), other dried vegetables
(0712.90.9002), other processed frozen vegetables (2004.90.85780), and canned olives (2005.70).
181 USDA, FAS, “Republic of Korea Product Brief, Produce Market Brief Update 2005,” October 5,
2005, 2.
182 Lee and Sumner, “The Prospective Free Trade Agreement with Korea,” January 2007.
183 USDA, FAS, “Republic of Korea Product Brief, Produce Market Brief Update 2005,” October 5,
2005, 2.
184 Lee and Sumner, “The Prospective Free Trade Agreement with Korea,” January 2007.
185 USDA, FAS, “Korea Product Brief, Condiments, Sauces, and Salad Dressings 2005,”
November 1, 2005, 2.
186 Lee and Sumner, “The Prospective Free Trade Agreement with Korea,” January 2007.
187 For additional analysis regarding SPS, TBTs, and other NTMs, see chap. 5 of this report.
188 USDA, FAS, “Korea Product Brief, Produce Market Brief Update 2005,” October 5, 2005.
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