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

TRQ for food whey, 223 based on current U.S. exports to Korea, would likely be somewhat
restrictive in the short term. The butter and cheese TRQs match current U.S. export levels
and would therefore also likely be restrictive initially. Despite the tariff eliminations and
increases in the in-quota TRQ quantities, competition from Australia and New Zealand in
the milk powder and “prepared dry milk and other” markets would likely hamper increased
U.S. exports to Korea in the short term.
This assessment of the FTA’s likely impact on U.S. dairy exports is similar to findings from
other economic analyses. For example, econometric modeling simulations done by Lee,
Sumner, and Ahn 224 show that lowering trade barriers on all dairy imports would result in
increases in Korean imports of dairy fats and nonfat skim milk from all sources, including
the United States. Similar findings are discussed in papers by Peng and Cox 225 and Beghin. 226
Table 3.10 Selected Korean dairy TRQs on imports from the United States
Initial annual
quantity
Compounded
annual growth
rate
222 (...continued)
that stage, U.S. exports of those dairy products to Korea would receive duty-free treatment in unlimited
quantities. The TRQ for milk powder and evaporated milk would be subject to a permanent 3 percent
increase compounded annually.
223 Feed whey is given immediate duty-free treatment.
224 Lee, Sumner, and Ahn, “Consequences of Further Opening of the Korean Dairy Market,” 2006,
238–248.
225 Peng and Cox, “An Economic Analysis of the Impacts of Trade Liberalization on Asian Dairy
Market,” 2006, 249–259.
226 Beghin, “Evolving Dairy Markets in Asia: Recent Findings and Implications,” 2006, 195–200.
3-36
Elimination
year
U.S. exports to
Korea in 2006
Total Korean
imports in
2006
Description
(mt) (percent) (mt)
Milk powders and
evaporated milk 5,000 3 None 1,017 8,918
Food whey
Butter and other fats
and oils derived from
3,000 3 10 2,665 34,336
milk
Fresh, curd grated or
powdered, processed,
200 3 10 197 2,087
and all other cheeses
Prepared dry milk and
7,000 3 15 6,848 44,016
other 700 3 10 210 20,808
Sources: USTR, “Final - United States - Korea FTA Texts,” 2007, Appendix 2-B-1; and Global Trade Information
Services, World Trade Atlas Database.
View of Interested Parties
The National Milk Producers Federation (NMPF), the U.S. Dairy Export Council (USDEC),
and the International Dairy Foods Association (IDFA) support the FTA and agree that full
implementation of the agreement will provide opportunities for increased U.S. dairy exports