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FTA deal leaves U.S. beef behind


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Insanity, they say, is doing the same thing over and over and expecting different results. U.S. trade negotiators are apparently willing to put that old adage to one more test.

Having been surprised by South Korea's recalcitrance in stepping back from the zero-tolerance agreement on boneless beef that the U.S. accepted in 2006 as a hoped-for starting point in re-instituting a full beef trade with South Korea, U.S. negotiators seemingly hopped back into the same pot.

At one time, the U.S. contended that failure to fully reopen beef trade — even though the issue wasn't part of the free-trade agreement (FTA) itself — was a deal breaker. Later, U.S. negotiators seemed to back away from that position, which some folks regarded as a strategic move to lessen its importance as a bargaining chip in the South Korean mind. Meanwhile, the South Korea contingent remained steadfast in its contention that even the mention of opening up rice as a trade issue in an FTA negotiation was a deal breaker.

When the dust cleared after 10 months of negotiation on a U.S.-Korea FTA on April 2, both sides were heralding a great outcome, but the beef issue was still in limbo and rice was strictly off the books. It seems the U.S. side — a little hungrier for an agreement — was mollified by South Korean assurances that it would open the market at some later date — perhaps even by year's end. Seems like we've heard that song somewhere before.

South Korea needs this FTA, and the U.S. bargaining position will never be stronger where the beef question is concerned. The Korea Ministry of Commerce, Industry and Energy reports that foreign direct investment in South Korea will increase by more than $3 billion, thanks to the FTA.

South Korea's textile, automobile, information technology and steel industries would likely be among the biggest winners under a U.S-Korea FTA, the Korea Herald reports, with their export volumes likely to jump due to tariff elimination. Ratification of an FTA would obligate the U.S. to immediately remove its 2.5% tariff on Korean autos with below 3,000-cc engine capacities, with tariffs being phased out over a three-year period on vehicles with engines of over 3,000-cc capacities. Automobiles account for 25% of Korean exports to the U.S., with South Korea selling 700,000 cars in the U.S. market annually, while just 4,000 U.S. vehicles are sold in Korea.

“Over 95% of Korean exports, in terms of value, are manufactured items,” said Kim Do-hoon, an economist at the Korea Institute for Industrial Economics and Trade. The Korea-U.S. FTA means that 94% of Korean manufactured goods will undergo early tariff elimination.

According to Yonhap News, South Korean Vice Finance Minister Chin Dong-soo said, shortly after FTA talks were concluded, that details of the U.S.-Korea FTA are done. That squelched the hopeful speculation that additional talks might be held over the beef-market question.

Understandably, many in the U.S. are incensed at the outcome of these FTA negotiations. Beef producers should be too, and legislators should stand firm against this FTA until South Korea fully reopens its beef market in accordance with international standards. It's up to beef producers to make themselves heard.

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© 2009 Penton Media Inc.

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