| U.S.–Korea
Bilateral Trade—With East Asia’s fastest-growing
economy after China, South Korea is a valuable trading
partner. The United States has long been first among Korea’s
trading partners, and Korea is the sixth-largest export
market and fourth-largest agricultural export market for
the United States (US&FCS 2002). In 2002, the United
States shipped more than US$23 billion in exports to Korea,
over 15 percent of Korea’s total imports for that
year. The United States also absorbed over 20 percent
of Korea’s exports for 2002. Although China is expected
eventually to become Korea’s largest trading partner,
due in part to its physical proximity, the trade relationship
between the United States and Korea is expected to continue
to grow (Korea Embassy U.S.A. 2003).
U.S.–Korea Agricultural
Trade—Due to its high population density
and lack of arable land, South Korea must import nearly
70 percent of its agricultural needs. U.S. agricultural
products, particularly beef and poultry, citrus fruits,
and animal byproducts compete well. The United States
ships US$3-4 billion in agricultural products to Korea
each year. These exports typically include approximately
30 percent bulk commodities, 25 percent intermediate
goods, and 35 percent high-value products. The recent
liberalization of trade policies has enhanced opportunities
for U.S. agricultural products. In 2001, Korea allowed
the importation of rice from the United States for the
first time. Although agricultural imports into Korea
are still subject to Korea’s stringent food regulations,
inspections procedures and labeling requirements, U.S.
agricultural products continue to compete well. Due
to the increasing number of working mothers and the
growing percentage of younger shoppers who enjoy imported
foods, U.S. convenience foods also compete well. The
expanding popularity of eating out further enhances
opportunities for imported foods. The U.S. Agricultural
Trade Office has identified cake mixes, coffee, frozen
fruits and vegetables, wines, meat, confectionary and
convenience foods as good prospects for U.S. export
to Korea (USDA/ATO n.d.).
Korea’s Beef Trade—The
demand for beef in Korea has expanded over the past
few years. Beef consumption increased by 34 percent
from 1995 to 2000. The worldwide foot and mouth disease
(FMD) outbreak in 2000 provoked a dip in beef consumption,
but the BSE episode in Japan in 2001 did not depress
consumption. Some Korean consumers opted for U.S. beef
during that period, when U.S. exporters marketed U.S.
beef as BSE-free meat. Domestic cattle production has
decreased markedly over the past two years, in part
due to anxiety among cattle farmers, who fear undercutting
by foreign imports. While the Korean government has
taken steps to rebuild the national herd, self-sufficiency
in beef is expected to decrease for several years and
fall to only 35 percent by 2010. At the same time, trade
negotiations through WTO and other agreements have led
to a decrease in non-tariff barriers related to beef.
For example, the Koreans have now agreed to allow retailers
to freeze fresh beef near the end of its shelf life.
The distribution of imported beef has also been facilitated
by the elimination of requirements for imported and
domestic beef to be sold in separate facilities. Imported
beef can now be offered for sale alongside domestic
beef. All of these factors contribute to an expanding,
dynamic market for imported beef in Korea (USMEF 2003j).
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U.S.-Korea Beef
Trade—South Korea ranks third in the list
of export markets for U.S. beef. Beef exports to Korea
from the United States have risen rapidly in recent
years, particularly after Korea liberalized beef imports
in 2001. Athough total beef imports to Korea dipped
in 2001, the U.S. share has risen steadily, climbing
from 51 percent in 1999 to approximately 63 percent
in 2002. Although consumers view domestic Hanwoo beef
as the highest quality, the shortage of Hanwoo has helped
sustain high prices. The large price gap between Hanwoo
and U.S. beef has served to increase sales of U.S. beef.
Australia, New Zealand, and China compete with lower
prices and strong marketing programs, but U.S. beef
still leads the imported beef market in Korea.
Kansas-Korea Beef Trade—South
Korea is second only to Japan as a market for Kansas
exports overall and is also the second most important
Asian market for Kansas beef. In 2002, Kansas exported
over US$134 million in beef to South Korea. Over US$122
million of those exports were frozen beef. The remainder
was in fresh or chilled beef, frozen offal, and other
variety meats. Kansas beef exports to Korea fell significantly
from 2000 to 2001. After a more than 100 percent increase
in Kansas beef exports to South Korea from 2001 to 2002,
beef exports to Korea in the first half of 2003 grew
by only about 7 percent. Despite this recent history
of uneven export levels, Kansas beef exports to Korea
are likely to increase, in keeping with overall U.S.
beef exports to Korea.
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