The U.S. Congress has approved a free trade agreement with South Korea that could dramatically increase American pork exports to the Asian country.
The agreement is good for American hog producers, but Canadian pork exports to Korea, worth $100 to $150 million annually, are now in jeopardy, says the executive director of the Canadian Pork Council.
“The interest of Korean buyers in Canadian pork is starting to decline … because they see that in a few months Canada will be a second class supplier,” said Martin Rice.
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“They (U. S. pork exporters) would have a five percent (price) advantage fairly quickly…. That essentially shuts us out.”
The U.S. Congress voted Oct. 12 in favour of free trade agreements with South Korea, Colombia and Panama, following several years of negotiations.
The American hog sector has championed a free trade arrangement with South Korea for years.
“These trade agreements will be a boon for U.S. pork producers and for the U.S. economy and jobs,” Doug Wolf, National Pork Producers Council president and a hog producer from Lancaster, Wisconsin, told theDes Moines Register.
“Passage of these FTAs is one of the greatest victories ever for the U.S. pork industry.”
The free trade agreement phases out Korea’s 20 percent tariffs on imported pork over a 10-year period.
Iowa State University economist Dermot Hayes has estimated the free trade deals with Korea, Colombia and Panama would increase U.S. pork exports by $770 million.
The deal means South Korea now has free trade agreements with the United States, the European Union and Chile, Canada’s three biggest competitors in the Korean pork market.
The Canadian pork industry issued a news release in January urging the federal government to resume free trade negotiations with Korea. Otherwise, Korea’s high tariffs would shut Canada out of a rich market for pork products.
“With a population of 50 million people and the high value for the items sold there, such as chilled shoulder butts and bellies, (loss of the Korean market) is significant enough to have a major impact on Canadian hog prices and jobs in both the farming and processing sectors,” said Canadian Pork International president Edouard Asnong.
Canada began trade negotiations with Korea in 2005, before the Americans and Europeans initiated their deals. It hasn’t sat down with the Koreans at the negotiation table for a couple of years but the framework for a deal is basically in place, Rice said.
“The negotiations with Korea are so close to being done…. I believe that conditions are such that Canada could resume negotiations with Korea and finish off a deal very quickly,” he said. “Probably one more meeting … and they could do it.”
Two obstacles remain: Korea’s post-BSE ban on Canadian beef and the objections of Canada’s auto industry.
Despite many years of frustration with Korea, Rice believes Canada’s beef industry is willing to play ball and work out a deal.
“They haven’t quite finished it (an agreement on beef ), but the cattlemen’s association has shown interest in having the two things run simultaneously. Finish the deal with Korea and fix the beef.”
He said the federal government can’t procrastinate because American hog producers now hold a significant advantage in the Korean market.
“The U.S. is calling its deal with Korea its most important trade deal since NAFTA,” Rice said. “I think Canada has to look at it from the same context.”
