Q. How would the U.S.-South Korea trade promotion agreement benefit Iowa?
A. The U.S.-South Korea trade promotion agreement is the most commercially significant U.S. trade agreement in over 15 years. With 49 million consumers, South Korea is the world’s 12th largest economy. According to the Obama administration’s Export Promotion Cabinet, this agreement would grow U.S. exports by up to $11 billion.
The U.S. already is Korea’s top supplier of agriculture products, and a large portion of the 70,000 U.S. jobs that would be supported by the U.S.-South Korea trade agreement are in the agricultural industry. The American Farm Bureau Federation estimates that the agreement could increase U.S. agricultural exports by as much as $1.6 billion a year. Under the agreement, the tariff on U.S. beef muscle cuts, currently at 40 percent, would be phased out over 15 years; the tariff on U.S. pork, currently as high as 25 percent, would be zero by January 1, 2016; and, corn and soybean producers would benefit not only from duty-free access to the South Korean market but also from increased demand for feed, as U.S. farmers increase livestock production to meet demand in South Korea.
Now that President Obama has reached an agreement with South Korea, he must present implementing legislation to both houses of Congress for approval before the agreement can go into effect.
Q. Are there other pending trade agreements?
A. I personally have urged President Obama to make open trade a priority and move forward with trade promotion agreements. The President should devote equal time and energy to implementing pending agreements with Colombia and Panama because while the United States sits on the sidelines, the rest of the world is moving ahead without us. President Bush signed the U.S.-Colombia trade promotion agreement on November 22, 2006, but implementing legislation for the agreement has yet to be passed by Congress. Earlier this year, Canada implemented its own trade promotion agreement with Colombia, giving Canadian products preference over their U.S. counterparts. According to the National Pork Producers Council, Canadian pork could virtually displace U.S. pork in the Colombian market if the U.S.-Colombia trade agreement is not implemented. Similarly, under a Colombia-Argentina trade agreement, Colombia’s tariff on corn imported from Argentina is being phased down to zero, and Argentina is rapidly gaining market share in Colombia’s corn market at the expense of U.S. corn exporters. Over 99 percent of Colombian agricultural products enjoy duty-free status in the U.S. without U.S. products receiving that treatment in Colombia. Implementation of the U.S.-Colombia trade agreement would turn this one-way street into a highway of trade. Once the agreement is implemented, most tariffs would be eliminated immediately for U.S. products, with the remaining tariffs phased out over a pre-determined period of time.
President Bush signed the U.S.-Panama trade promotion agreement on June 28, 2007. Like the U.S.-South Korea and U.S.-Colombia trade agreements, implementing legislation for this agreement has yet to be passed by Congress. Panama’s average tariff on industrial and consumer products is seven percent, and its average agricultural tariff is 15 percent. But its tariffs can be much higher. For example, Panama’s pork tariffs can be as high as 70 percent. Upon implementation of the U.S.-Panama trade agreement, 88 percent of U.S. exports of consumer and industrial goods will receive immediate duty-free treatment, and the remaining tariffs will be phased down to zero over a period of ten years.