Source: Michael Fielding, MEATINGPLACE, 10/13/11

Yesterday’s passage of free trade agreements with South Korea, Panama and Colombia came just in time for the U.S. meat industry as the economy continues to lag and the only way up – it seems – is overseas.
AMI President and CEO J. Patrick Boyle called the long-awaited ratification a “shot in the arm” to the meat and poultry industries – possibly the biggest since the passage of the North American Free Trade Agreement (NAFTA) in 1994.

One of the biggest benefits is that the agreements will gradually phase out import tariffs imposed by the three nations.

Beef
The agreements would level the playing field for U.S. beef by eliminating import tariffs imposed by Colombia (80 percent), Panama (30 percent) and South Korea (40 percent) over the next 15 years.

Although the agreements weren’t unexpected, they were a long time coming, Bill Donald, president of the National Cattleman’s Beef Association (NCBA) and a Montana rancher, told Meatingplace. “It couldn’t come at a better time for the industry. We’ve worked through the issues of the BSE crisis of 2003, and now exports add $200 per steer to revenue that cattle bring in,” he said.

The beef industry currently exports $850 million annually to South Korea, and the agreement is expected to double that to $1.8 billion annually.

South Korea – at one point the largest trading partner with the United States – also may serve as a model for other Asian nations the U.S. meat industry is eager to enter, specifically China and Japan, which has a robust beef trade with the United States but only allows cattle younger than 20 months of age. Increasing that to 30 months of age could translate into $1 billion annually, Donald added.

Pork
“These trade agreements will be a boon for U.S. pork producers and for the U.S. economy and jobs,” Doug Wolf, NPPC president and a pork producer from Lancaster, Wis., said in a statement. When fully implemented, the deals with Colombia, Panama and South Korea will generate nearly $772 million in new pork sales, add more than $11 to the price producers receive for each hog marketed and create more than 10,000 pork industry jobs, according to Iowa State University economist Dermot Hayes.
In December when the United States and South Korea were at an impasse over trade in automobiles, the U.S. pork industry agreed to move back the effective date for when much of its exports enter Korea at a zero tariff rate. The move helped clear the way for Wednesday’s passage. Exports are vital to the U.S. pork industry, which last year shipped nearly $4.8 billion of pork, an amount that added about $56 to the price producers received for each hog marketed.

Poultry
According to a recent impact study conducted in part by AMI, the South Korean, Colombian and Panamanian FTAs could increase U.S. exports of poultry by $102 million. The jobs resulting from this growth, both in the commodity groups and downstream, would include an estimated 1,200 jobs in the poultry industry.

Trade with South Korea
The ratification of the agreements served as the backdrop of Thursday’s White House visit by South Korea’s president, Lee Myung-bak. In a Reuters report, Lee called the agreement "a new engine of growth that will propel our economies forward,” although that nation’s parliament still needs to ratify the agreement.
Meanwhile, the Asian nation came under fire by Canadian Agriculture Minister Gerry Ritz, who stepped up pressure on South Korea to lift its ban on Canadian beef. Although South Korea reopened its market to American beef in 2008 (five years after it banned North American beef imports in the wake of the BSE crisis), it has yet to lift its ban on Canadian beef.

During a trade mission to Berlin on Wednesday, Ritz told reporters that South Korea has until the end of the year to lift its ban lest it turns the matter over to the World Trade Organization.

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