When reports began circulating that the Trump Administration may issue intent to withdraw from the Korea-U.S. Free Trade Agreement (KORUS), agricultural groups jumped into action.
Over the Labor Day weekend statements were filling my inbox as groups were quick in issuing a stern warning that withdrawal from the pact, and the larger strategy of brinkmanship with regard to trade agreements by the White House, could have disastrous consequences for the nation's farmers.
Roger Benard, policy analyst for Informa, explained, “The White House is letting it be known that getting out of KORUS is not on the table right now, but could be down the road.” So yet another trade deal adding uncertainty to the market with comments from the President.
South Korea walked away from talks with the United States on updating the deal on Aug. 21, saying it needs further “investigation, analysis and evaluation” before making any decision. Many agricultural groups have been trying to convey the benefits of the South Korea deal to U.S. agriculture and how harmful it would be if the United States withdraws.
The National Pork Producers Council sent an alert to their members pleading for pork producers’ voices to be heard by the Trump Administration and Congressional members.
“There were many contacts made, and we are sure others in agriculture also engaged. Efforts by producers have made the difference,” said an email alert from Neil Dierks, NPPC CEO and Ken Maschhoff, NPPC president.
Their letter shared how one specific contact by a producer that started with a member of Congress on Labor Day requesting they make contact with the President. "It was reported back to us that this member of Congress had a one-on-one conversation this morning with the President on the importance of the Korean Free Trade Agreement to the U.S. pork industry," they stated.
After an extended discussion the President told that member of Congress to: “Tell the Pork producers not to worry. I won't hurt them,” the NPPC leaders told their industry partners.
South Korea’s ambassador to the U.S. said on Sept. 11 that the two countries have yet to establish the extent of potential renegotiations of a U.S. – Korea free trade deal or set a date for a second attempt at discussing possible changes after talks in August sizzled out.
Politico reported Ambassador Ahn Ho-Young as saying, “Let’s go step by step, rather than jumping the gun. We had only the first round, so let us see how it goes.”
Korea market matters
American Soybean Association (ASA) president Ron Moore said in a statement to President Trump ahead of the decision that a withdrawal from KORUS would hurt everyone and Moore again found himself and others in agriculture fighting to communicate the value of trade to farmers.
The United States supplies nearly half of the 1.3 million tons of soybeans South Korea imports, with no tariffs as a result of the KORUS agreement. “Most of Korea’s soybean imports, however, come from our competitors in Brazil and Argentina. If we withdraw, reinstatement of tariffs will make it hard to maintain our market share and will further increase our competitors’ advantage. And it would be devastating for our U.S. livestock customers who export meat products to South Korea,” Moore said.
Moore also took issue with the disregard of how important trade is to American farmers and remaining competitive in the world market. “The idea that we're the only game in town when it comes to selling soybeans or other agricultural products abroad is false. So is the notion that there’s always another country that will buy our commodities. Furthermore, even the threat to withdraw from this or any trade agreement is a dangerous course of action. Repeatedly walking our trade relationships to the brink, or actually breaking them, only weakens our standing abroad.”
The U.S. Grains Council (USGC) warned it will lead to immediate and sustained losses in sales to the third largest corn customer as well as DDGS as fully 96% of feed producers in South Korea now use DDGS, USGC said.
The U.S. Wheat Associates (USW) and National Association of Wheat Growers (NAWG) also strongly urged the administration not to withdraw. Korea was the third largest volume importer of U.S. wheat in marketing year 2016/17.
“We believe it would be irresponsible to unilaterally walk away from this or any other trade agreement,” said Mike Miller, USW chairman and a wheat grower from Ritzville, Wash. “Withdrawing raises the specter of retaliation against agricultural exports and creates unnecessary uncertainty in the market. Any disruption in the relationship wheat growers have built in Korea over more than 60 years gives Australia, Canada and even Russia an opening to move in and take business away from us at a time when we are all struggling to stay profitable.”
"We think this trade agreement, negotiated in good faith and strongly supported in Congress, reinforces the Administration's stated goal to sell more agricultural products overseas,” said David Schemm, NAWG president and a wheat grower from Sharon Springs, Kan. “We support finding ways to improve any agreement, but let’s do that in a reasoned and respectful way, with input from all stakeholders so U.S. wheat farmers can gain greater access to world markets."
CEOs of the National Cattlemen’s Beef Association, the North American Meat Institute, and U.S. Meat Export Federation (USMEF) sent a letter at the end of July to USDA Secretary Sonny Perdue and Ambassador Robert Lighthizer of USTR to urge the administration not to jeopardize market access during a potential KORUS re-do.
Under KORUS, the U.S. beef industry has seen an 82% increase in annual sales to South Korea, from $582 million in 2012 to $1.06 billion in 2016, making South Korea the second largest export market for U.S. beef.
NPPC has also actively been sharing the detrimental effect on U.S. pork producers reverting to pre-KORUS tariffs would have. For the 12-month period ending May 2017, U.S. pork exports to South Korea were $444 million, making the Asian nation the No. 5 export market for U.S. pork.