U.S.-South Korea Beef Dispute: Issues and
Status
Remy Jurenas
Specialist in Agricultural Policy
Mark E. Manyin
Specialist in Asian Affairs
September 23, 2010
Congressional Research Service
7-5700
www.crs.gov
RL34528
CRS Report for Congress
P
repared for Members and Committees of Congress
U.S.-South Korea Beef Dispute: Issues and Status
Summary
U.S. beef access to South Korea is one of the outstanding issues in the debate over the Korea-U.S.
Free Trade Agreement (KORUS FTA). In 2003, South Korea was the third-largest market for
U.S. beef exports, prior to the ban its government imposed after the first U.S. cow infected with
mad cow disease, or BSE (bovine spongiform encephalopathy), was discovered. Some Members
have stated that congressional consideration of, and support for, KORUS depends on South Korea
fully opening its market to U.S. beef. Currently, South Korea allows imports of most U.S. beef
products, except those from cattle older than 30 months.
On April 18, 2008, U.S. and South Korean negotiators reached an agreement on the sanitary rules
that Korea will apply to beef imports from the United States. It allows for imports of all cuts of
U.S. boneless and bone-in beef and certain beef products from cattle, irrespective of age, as long
as specified risk materials known to transmit mad cow disease are removed and other conditions
are met. Though the U.S. beef industry and U.S. policymakers welcomed this deal, Korean TV
coverage and Internet-spread rumors that questioned the safety of U.S. beef resulted in escalating
protests and calls for the beef agreement to be renegotiated or scrapped. U.S. officials countered
that measures already in place to prevent the introduction of BSE in U.S. cattle herds meet
international scientific standards. To address rising public pressure, the Korean government twice
pursued talks with the United States to find ways to defuse these concerns without
“renegotiating” the beef agreement. This culminated in the June 21, 2008, confirmation by both
governments of a “voluntary private sector” arrangement that allows Korean firms to import U.S.
beef produced from cattle only under 30 months of age. Both governments view this as a
transitional step until Korean consumer confidence in the safety of U.S. beef improves.
Since the resumption of U.S. beef exports in July 2008, U.S. exporters have worked to recapture
this key overseas market. Beef exports to South Korea in 2010 are well above last year’s level
and may reach one-half of the 2003 level (in value terms). Though Australia is the main
competitor, U.S. exporters have gained noticeable market share since the Korean market reopened
to U.S. beef. Promotional efforts to rebuild consumer confidence in U.S. beef, aggressive
marketing efforts by large store chains, and much lower retail prices for imported beef than for
Korean beef account for the continued growth in U.S. beef sales.
On June 26, 2010, President Obama directed Administration officials to work with their Korean
counterparts to resolve the beef and auto issues with South Korea by this November’s G-20
meeting in Seoul. He also stated that his intent is to present the KORUS FTA to Congress, likely
in 2011. Administration officials have stated that their objective is “to eventually secure full
market access for U.S. beef” that reflects South Korea’s recognition that the United States meets
international scientific standards. More recent statements have raised the possibility that the
Administration may not require achieving this objective before the KORUS FTA is sent to
Congress, and instead may seek to secure commitments from South Korea to move in steps
toward that goal. Bilateral discussions later this fall are expected to focus on the terms of, and the
timetable for, South Korea’s moving to accept all U.S. beef shipments, irrespective of the age of
slaughtered cattle, as laid out in the April 2008 agreement. Since this document is separate from
the text of the KORUS FTA, it could be amended easily if both countries agree to changes.
Korea’s position on the beef issue likely will be shaped by the memory of the size and intensity of
the anti-beef agreement protests, which likely have eroded the Korean President’s willingness and
ability to accept changes the Obama Administration may seek before submitting the KORUS FTA
to Congress.
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U.S.-South Korea Beef Dispute: Issues and Status
Contents
The “Mad Cow” Disease Dispute ................................................................................................ 1
U.S. Beef Exports to South Korea Through 2003................................................................... 1
South Korea’s Ban on U.S. Beef Imports............................................................................... 3
Beef Access Became Intertwined with KORUS FTA Talks .................................................... 3
U.S. Beef Exports During the 2004-2007 Period.................................................................... 4
U.S. and South Korean Negotiating Objectives...................................................................... 5
April 2008 Beef Agreement and Subsequent Change ............................................................. 5
Reaction to April 2008 Agreement............................................................................................... 6
Beef in the KORUS FTA............................................................................................................. 7
Market Access Provisions ..................................................................................................... 7
Cattle Producer and Meat Industry Views .............................................................................. 8
Implementation of 2008 Beef Access Agreement......................................................................... 9
Administrative Steps Taken................................................................................................... 9
Beef Sales Under the Agreement ........................................................................................... 9
Impact of Beef Protests on Bilateral Relations and the KORUS FTA ......................................... 12
Options Under Consideration .................................................................................................... 13
Figures
Figure 1. Value of U.S. Beef Exports to South Korea, by Type..................................................... 2
Figure 2. Quantity of U.S. Beef Exports to South Korea, by Type................................................ 2
Figure 3. South Korean Beef Imports by Leading Suppliers......................................................... 3
Figure 4. Value of U.S. Beef Exports to South Korea, Quarterly ................................................ 10
Figure 5. Quantity of U.S. Beef Exports to South Korea, Quarterly............................................ 11
Contacts
Author Contact Information ...................................................................................................... 15
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U.S.-South Korea Beef Dispute: Issues and Status
any U.S. policymakers view the resumption of all U.S. beef exports to South Korea—
the third-largest U.S. beef export market in 2003—as essential, but not necessarily all
M that is required, before the U.S. Congress would consider legislation to implement the
Korea-U.S. Free Trade Agreement (KORUS FTA).1 To facilitate this, in April 2008 the U.S. and
Korean governments agreed on (but subsequently modified) the rules that Korea will apply to
U.S. beef imports to ensure that shipments meet Korean human health standards. South Korea’s
aim was to improve prospects that the Bush Administration would send the KORUS FTA to
Congress before the end of 2008. This did not occur, however, for the reasons explained below. In
late June 2010, President Obama directed U.S. trade officials to work with their South Korean
counterparts to resolve outstanding matters related to U.S. beef access and the agreement’s
automobile provisions2 by the time he meets with South Korean President Lee in Seoul in mid-
November 2010. Obama’s statement that he intends “in the few months” after this meeting to
present Congress with implementing legislation for this agreement sets a time frame for possible
consideration by the 112th Congress. Though the auto provisions are likely to be more difficult to
resolve, the outcome of talks on the beef access issue could influence the position of Members of
Congress who represent cattle production and beef processing states if a vote is scheduled on this
trade agreement.
This report describes the beef provisions in the KORUS FTA and the separate bilateral protocols
that the United States has negotiated in order to secure the lifting of South Korea’s ban on U.S.
beef imports, imposed after the discovery of mad cow disease in late 2003. It also summarizes
U.S. beef export developments to this key market before and after the ban and since these
protocols took effect; and lays out the outstanding issues on U.S. beef access that will likely need
to be resolved to facilitate congressional consideration of the KORUS FTA.
The “Mad Cow” Disease Dispute
U.S. Beef Exports to South Korea Through 2003
Beginning in the late 1990s, South Korea became a growing and important market for major beef
exporters, particularly the United States. In 2003, beef imports accounted for nearly 75% of South
Korean beef consumption. U.S. shipments that year alone supplied half of all of the beef
consumed by Korean consumers.
By 2003, South Korea had become the third-largest export market for U.S. beef. That year, U.S.
beef exports to South Korea totaled $815 million (Figure 1), or 246,595 metric tons (MT)
(Figure 2), and accounted for 21% of the $3.9 billion in U.S. beef products shipped worldwide.
Beef exports represented 28% of all U.S. agricultural exports to Korea. Boneless beef products
accounted for $449 million (55% of the total). Bone-in beef exports totaled $292 million (36%).
Sales of beef variety meats (primary offals—tongue, liver, heart, and other edible cattle parts)
1 For more information, see CRS Report RL34330, The Proposed U.S.-South Korea Free Trade Agreement (KORUS
FTA): Provisions and Implications, coordinated by William H. Cooper.
2 For more information on the automobile provisions, see section titled “Competing Automobile Manufacturers” in
CRS Report R41389, Pending U.S. and EU Free Trade Agreements with South Korea: Possible Implications for
Automobile and Other Manufacturing Industries , by Michaela D. Platzer.
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were $65 million (8%). Processed beef product shipments were valued at $9 million (1%). The
U.S. market share of Korea’s beef imports reached 69% (Figure 3).
Figure 1. Value of U.S. Beef Exports to South Korea, by Type
900
815
800
648
700
rs
600
lla
o
500
390
d
n
400
294
291
illio
300
m
216
200
119
111
100
0.2
1.2
0.6
0
2001 2002 2003 2004 2005 2006 2007 2008 2009
2009 2010
Jan - July
Boneless Beef
Bone-In Beef & Beef Carcasses
Beef Variety Meats (Offals)
Beef & Veal, Prepared/Preserved
Source: Derived by CRS from Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics.
Figure 2. Quantity of U.S. Beef Exports to South Korea, by Type
238
247
250
200
ons
150
t
150
tric
e
100
57
56
63
thousand m
50
25
29
0.14
0.0
0.23
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2009
2010
Jan - July
Boneless Beef
Bone-In Beef & Beef Carcasses
Beef Variety Meats (Offals)
Beef & Veal, Prepared/Preserved
Source: Derived by CRS from Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics.
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U.S.-South Korea Beef Dispute: Issues and Status
Figure 3. South Korean Beef Imports by Leading Suppliers
350,000
300,000
250,000
*
s
n 200,000
to
c
tri 150,000
e
m
100,000
50,000
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2009
2010
Jan - July
United States
Australia
New Zealand
Other Countries
Source: U.S. Department of Agriculture (USDA), Foreign Agricultural Service; Korea International Trade
Association.
Note: Imports refer to beef, fresh/chilled and frozen, boneless and bone-in, but exclude beef variety meats and
processed beef products.
* product weight equivalent
South Korea’s Ban on U.S. Beef Imports
After the first U.S. case of bovine spongiform encephalopathy (BSE), or mad cow disease, was
discovered in a Canadian-born cow in Washington state in December 2003,3 South Korea and
many other countries banned imports of U.S. beef. BSE is a fatal, neurodegenerative disease of
cattle thought to arise from the consumption of animal-derived protein supplements added to
feed. Scientists believe that this disease can be transmitted to humans who eat the brain, spinal
cord, or other high-risk tissues of BSE-infected cattle, which causes a variant form of Creutzfeldt-
Jakob disease (CJD). This is a very rare and incurable degenerative neurological disorder (brain
disease) that is ultimately fatal.
Beef Access Became Intertwined with KORUS FTA Talks
U.S. government efforts to regain partial access to the key Korean market took two years to
negotiate. In January 2006, South Korea agreed to a protocol that allowed imports of U.S.
boneless beef only from cattle less than 30 months old. At that time, the under-30-months-old
criterion was based on the widely held view that cattle younger than 30 months were less
3 There have been only two other discoveries of BSE in cattle in the United States—in June 2005, in a U.S.-born cow
on a Texas farm, and in March 2006, in another U.S-born cow in Alabama. For more information on U.S. safeguards to
protect cattle herds from BSE, third-party assessments made of U.S. import safeguards against the introduction of BSE,
debate and developments on the livestock “feed ban” issue, U.S. surveillance and testing programs for BSE in cattle,
and BSE prevention in cattle slaughter and beef processing, see CRS Report RL32199, Bovine Spongiform
Encephalopathy (BSE, or “Mad Cow Disease”): Current and Proposed Safeguards, by Sarah A. Lister and Geoffrey S.
Becker.
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U.S.-South Korea Beef Dispute: Issues and Status
susceptible to mad cow disease. U.S. negotiators had signaled that some opening on the beef issue
was necessary before negotiations with South Korea on a comprehensive FTA could begin.
Difficulties experienced in exporting beef later that year to Korea under this first agreement,
however, began to affect the negotiating dynamics of the overall FTA, even though this issue was
not on the formal agenda. Separate bilateral discussions on this sensitive issue moved from the
technical level to high-level meetings as both sides raced to conclude the KORUS FTA by the end
of the March 2007 deadline set by then-in-effect trade promotion authority. However, the beef
issue was not resolved by the time both countries concluded this trade agreement.
Then-South Korean President Roh Moo-hyun, in a national address on April 1, 2007, stated he
had personally promised President Bush that his government would “uphold the
recommendations” of the World Organization for Animal Health (OIE) on the BSE risk status of
the United States and “open the Korean [beef] market at a reasonable level.” The OIE is the
international scientific body recognized by the World Trade Organization as the reference for
matters of animal disease and health. On May 22, 2007, the OIE formally found that the United
States is a “controlled risk” country for the spread of mad cow disease. The U.S. Department of
Agriculture’s (USDA’s) top official on this matter commented that this “risk classification
recognizes that OIE-recommended, science-based measures are in place to effectively manage
any possible risk of BSE in the [U.S.] cattle population” and “provides strong support that U.S.
regulatory controls are effective and that U.S. cattle and products from cattle of all ages can be
safely traded in accordance with international guidelines, due to our interlocking safeguards.”4
USDA immediately requested that South Korea amend its import requirements for U.S. beef
within a specified time frame to reflect this risk determination and to reopen its market to all U.S.
cattle and beef products. In response, South Korea’s animal health regulatory agency began an
eight-step process to assess the BSE risks of the U.S. beef sector in light of the OIE finding, with
the intent to negotiate a revised bilateral agreement that would lay out import rules applicable to
U.S. beef. Against this backdrop, U.S. boneless beef exports resumed in late April 2007, with
occasional breaks when Korean inspectors refused entry to some shipments that contained bones
or did not meet other requirements laid out in the January 2006 agreement. With the third
discovery of prohibited bones on October 5, 2007, South Korean authorities announced they
would not conduct any more inspections of U.S. beef until both sides conclude formal
negotiations to revise the 2006 protocol.
U.S. Beef Exports During the 2004-2007 Period
Minimal U.S. beef offal exports occurred in 2004, 2005, and 2006 (Figure 1 and Figure 2), due
to South Korea’s ban on imports after the first U.S. BSE-infected cow was discovered in
December 2003. Though some U.S. boneless beef sales occurred in the last few months of 2006
after South Korea agreed to implement the January 2006 agreement, Korean inspectors rejected
these shipments after discovering small bone fragments in a few boxes. From 2004 to 2006, beef
shipments from Australia and New Zealand increased substantially to cover South Korean
demand that had previously been met by U.S. beef exporters (Figure 3). In 2007, both countries
accounted for 92% of South Korea’s beef imports, compared to 29% in 2003.
4 USDA, Animal and Plant Inspection Service, “Statement by Dr. Ron DeHaven Regarding OIE Risk
Recommendation,” March 9, 2007, available at http://www.aphis.usda.gov/newsroom/content/2007/03/
OIE_statement3-9-07.shtml.
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U.S. boneless beef exports to South Korea resumed in late April 2007 and continued through
early October 2007, when bone fragments again were found. During this period, Korea’s
quarantine regulatory agency inspected and cleared for retail sale most U.S. boneless beef
shipments, applying its interpretation of the January 2006 agreement. Even with partial-year
exports, South Korea ranked as the fourth-largest market for U.S. beef in 2007, with sales of $119
million (Figure 1) or 25,165 MT (Figure 2).
U.S. and South Korean Negotiating Objectives
The longstanding U.S. negotiating position had been to press for full access in one step for all
U.S. beef into South Korea’s market. This meant expanding the scope of the 2006 agreement to
include exports of bone-in beef and coverage of all U.S. beef from cattle, regardless of age, as
long as BSE-risk materials are removed during processing. U.S. trade officials maintained that
U.S. beef is safe, pointing out that it is consumed by millions of Americans. They frequently
noted that the U.S. measures in place to prevent the introduction of BSE in U.S. cattle herds
already meet international scientific standards as spelled out by the OIE.
South Korea argued for a “two-phased” approach to a full opening. The first step would allow
imports of both boneless and bone-in beef cuts from U.S. cattle less than 30 months old. Cattle
parts identified by the OIE as agents that can transmit BSE to cattle and in turn, potentially harm
humans, would have to be removed from imported beef. Korea’s trade minister argued this first
step would give the United States about 80% of the market share it had before the ban on U.S.
beef took effect in late 2003. The second step to take effect later would permit imports of beef
from older cattle, as long as risk materials are removed according to OIE’s standards.5
April 2008 Beef Agreement and Subsequent Change
Just hours before newly elected Korean President Lee met President Bush at Camp David on
April 18, 2008, U.S. and South Korean negotiators reached agreement on the sanitary rules that
Korea will apply to beef imports from the United States. It allows for imports of all cuts of U.S.
boneless and bone-in beef and other beef products from the edible parts of cattle, irrespective of
age, as long as specified risk materials (SRMs) known to transmit mad cow disease are removed
and other conditions are met. However, both sides revised this deal in a late-June private-sector
arrangement that will for an unspecified time period limit sales of U.S. beef (boneless and bone-
in) only to cattle less than 30 months old when slaughtered. Combined, the new rules
significantly expand upon the products covered by the January 2006 protocol, which only
permitted imports of boneless beef from cattle under 30 months old.
The April 2008 agreement requires the removal of specified risk materials (SRMs) during meat
processing, and prohibits the entry of (1) all mechanically recovered and mechanically separated
meat and (2) advanced meat recovery (AMR) product from the skull and vertebral column of
cattle 30 months of age and over at the time of slaughter. These prohibitions reflect scientific
conclusions that these materials can harbor the BSE agent in cattle and in turn infect humans if
product from such cattle are consumed.6 Other provisions detail which other beef products can
5 Inside U.S. Trade, “Korean Minister Sees Open Beef Market In Two Steps, Delay In FTA Approval,” November 16,
2007, p. 5.
6 Specified SRMs are “tonsils and distal ileum from cattle of all ages; and [the] brain, eyes, spinal cord, skull, dorsal
(continued...)
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U.S.-South Korea Beef Dispute: Issues and Status
enter, or are prohibited from entering, South Korea.7 The agreement also prescribes the steps that
South Korea’s quarantine inspection agency can take if banned cattle parts or other problems are
found in a shipment from a U.S. meat firm, and specifies what its counterpart U.S. agency
(USDA’s Food Safety and Inspection Service, or FSIS) must do to address the matter. These are
intended to serve as a map for handling specific problems in a way that does not stop altogether
the flow of all U.S. beef exports to South Korea. Other rules spell out the requirements that U.S.
beef processing plants and the FSIS must meet, in order for beef and beef products to be sold to
South Korea.8
The private-sector deal announced on June 21, 2008, reflects a “commercial understanding”
reached between Korean beef importers and U.S. exporters, that as “a transitional measure,” only
U.S. beef from cattle under 30 months of age will be sold to Korea. The U.S. Trade
Representative (USTR), in acknowledging the request made by the U.S. meat industry for
Korea’s beef importers, stated that the U.S. government will meet this request under a Quality
System Assessment (QSA) program that will verify that beef destined for Korea will be from
cattle less than 30 months old. This program will be voluntary—operating only at those beef
processing plants that seek to sell beef and beef products to that market.9 (See “Implementation”
for status of this QSA program.)
Reaction to April 2008 Agreement
While the U.S. beef industry and U.S. policymakers welcomed the April deal, Korean TV
coverage of the issue and Internet-spread rumors that questioned the safety of U.S. beef sparked
large candlelight vigils in South Korea to protest the beef agreement. Opposition political parties
soon joined these protests, advocating that the government renegotiate or scrap the agreement.
Farmers also called for the National Assembly (Korea’s parliament) to reject the KORUS FTA
when considered during a special session later in May 2008. Opponents argued that the Korean
government moved too quickly to strike a deal, and did not secure enough safeguards against the
dangers of mad cow disease.
These developments, in turn, adversely affected the political standing of Korea’s new President
and his government’s inability to pursue his ruling political party’s policy agenda—one item
being the approval by the National Assembly of the KORUS FTA. To respond to mounting public
(...continued)
root ganglia and vertebral column (excluding vertebrae of the tail, transverse processes and spinous processes of the
cervical, thoracic and lumbar vertebrae, median crest and wings of the sacrum) from cattle 30 months of age and over
at the time of slaughter.” For more information, see “BSE Prevention in Slaughter and Processing: the ‘Fourth
Firewall’” in CRS Report RL32199, Bovine Spongiform Encephalopathy (BSE, or “Mad Cow Disease”): Current and
Proposed Safeguards, by Sarah A. Lister and Geoffrey S. Becker.
7 AMR product that is free of SRMs and central nervous system tissues is allowed. Ground meat, processed products
and beef extracts may contain AMR but must be free of SRMs and all mechanically recovered or separated meat.
8 These detail the scope of U.S. plants operating under USDA inspection that are eligible to sell to South Korea, the
origin of foreign cattle imported into the United States from which beef can be exported to Korea, the steps that FSIS
will take to handle cases of the discovery of a food-safety hazard in a U.S. firm’s shipped beef product or inspection
audit, the requirement that certain U.S. steak products be temporarily labeled, the on-site audits that Korea’s inspectors
can conduct of U.S. facilities exporting beef to Korea, and the scope of measures that the United States implements to
meet or exceed OIE guidelines for controlled-risk BSE status.
9 USTR, “USTR Confirms Korea’s Announcement on U.S. Beef,” June 21, 2008.
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pressure, the Korean government twice pursued talks with the United States to find ways to
defuse public concerns without “renegotiating” the beef agreement. A May 19, 2008, exchange of
letters affirms that South Korea has the right under international agreements to take steps to
protect its citizens from health and safety risks (i.e., suspend U.S. beef imports if a BSE-infected
cow is discovered in the United States). On June 21, 2008, both governments confirmed a
“voluntary private sector” arrangement that allows Korean firms to import U.S. beef produced
only from cattle less than 30 months old, and announced some changes to the April agreement.
Although South Korea secured the application of the under-30-months-old criterion with respect
to U.S. beef imports, the OIE in contrast makes no age distinction in assessing the risk level of
cattle slaughtered for beef. Instead, its recommendation is that importing countries, to prevent the
introduction of BSE, ensure that beef of any age meet certain conditions, such as the removal of
those cattle tissues suspected of transmitting BSE and the implementation of effective safety
controls for cattle feed. Though the United States for some time has argued that it is in full
compliance with OIE guidelines, U.S. negotiators appear to have had little choice but to
compromise in a way that would allow some sales to resume. Publicly, both countries presented
this arrangement as a transitional step to improve Korean consumer confidence in U.S. beef, and
did not commit to any timetable for revisiting this matter.
Some Members of Congress responded cautiously or skeptically to the “voluntary commercial
agreement,” noting that it changes the April protocol by allowing Korea to reject U.S. beef from
cattle over 30 months of age, disregards international standards that affirm the safety of all U.S.
beef regardless of age, and sets an “unfortunate” or “dangerous” precedent in negotiating the
terms of beef access into other countries.10
South Korean government officials portrayed the June-negotiated arrangement as going far to
allay public concerns about the safety of U.S. beef. However, the political fallout of the
controversy continued through the summer of 2008. Three high ranking Korean officials
(including the Agriculture Minister and his deputy) resigned because of their involvement in the
agreement’s negotiations. The Korean National Assembly completed an inconclusive
parliamentary inquiry on the strategy and process followed by two successive governments on
negotiating this agreement. It also debated a controversial livestock sector bill that includes a ban
on beef imports from any country whenever a new case of a BSE-infected cattle is discovered. As
adopted, the measure reportedly exempts the bilateral beef agreement reached with the United
States from being subject to its coverage.
Beef in the KORUS FTA
Market Access Provisions
Under the KORUS FTA, South Korea would eliminate over a 15-year period its 40% tariff on
beef muscle meats imported from the United States. South Korea also would have the right to
impose additional tariffs on a temporary basis in response to any surges in imports of U.S. beef
10 For example, see press releases issued on June 21, 2008 by Senator Baucus, “Baucus Comments on U.S.-Korea Beef
Changes”; Senator Chambliss, “Sen. Chambliss Statement on South Korea’s Announcement Regarding U.S. Beef”;
Senator Nelson, “Nelson Responds to Beef Agreement with South Korea.”
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meats above specified levels. The trigger for this additional tariff would be 270,000 metric tons
(MT) in year 1, and would increase 2% annually. In year 15, the trigger would be 354,000 MT.11
In year 16, this protective safeguard mechanism would no longer apply. Separately, the 18% tariff
on imports of beef offals (tongues, livers, tails and feet), and tariffs ranging from 22.5% to 72%
on other beef products, would also be eliminated in 15 years.
Assuming that South Korea fully lifts its restrictions on U.S. beef, and bilateral beef trade returns
to normal, the U.S. International Trade Commission (USITC) estimates that the phase-out of
South Korea’s beef tariff and safeguard could increase U.S. beef exports by about $600 million to
$1.8 billion (58% to 165%) above what would be the case without this agreement.12 In another
analysis, the American Farm Bureau Federation (AFBF) projects that U.S. beef sales would be
$265 million higher than otherwise as the United States recaptures its historic share of the South
Korean market. However, the AFBF notes that the market share of U.S. beef likely will not
increase over time, because South Korean tastes have developed a preference for grass-fed
Australian beef, which will continue to be competitive in price against U.S. beef even if the
current 40% tariff is removed.13
Cattle Producer and Meat Industry Views
Key U.S. interest groups have frequently acknowledged that the full benefits associated with the
KORUS FTA’s beef market access provisions can only be attained if both countries work through
the issue of addressing South Korea’s lingering concerns about the safety of U.S. beef exports.
Cattle producers are divided on their support for the KORUS FTA. The National Cattlemen’s
Beef Association (NCBA) and the U.S. Cattlemen’s Association (USCA) are in favor. The
Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America (R-CALF USA)
opposes it.14 Beef processors and packers, represented by the American Meat Institute (AMI) and
the National Meat Association (NMA), support this agreement.15
11 In 2003, U.S. exports of beef muscle meats to South Korea totaled 213,083 MT. The safeguard level in year 1 would
allow for duty-free access for about 20% more U.S. beef than the average 2002-2003 level of U.S. beef exports to the
South Korean market. To place this in the context of recent export activity, the U.S. Department of Agriculture
estimates that U.S. beef muscle meat exports in 2010 could reach about 78,000 MT (see footnote 20).
12 Derived by CRS from Table 2.2 in USITC, U.S.-Korea Free Trade Agreement: Potential Economy-wide and
Selected Sectoral Effects, pp. 2-8 and 2-9.
13 Derived by CRS from AFBF’s Implications of a South Korea-U.S. Free Trade Agreement on U.S. Agriculture, July
2007, p. 17.
14 The NCBA, with a claimed membership of 230,000 cattle producers, breeders, and feeders, advocates policy
positions and economic interests on behalf of farmers and ranchers and 40 national breed and industry organizations.
NCBA has been the traditional “main line” trade association representing the interests of U.S. cattle producers for over
100 years, and historically has been supportive of efforts to expand two-way trade and “free trade” generally. The
USCA, formed in 2007, represents cattle producers’ interests in Washington, DC, and advocates for mandatory
country-of-origin labeling and international trade, market competition, reform of the mandatory beef check-off
program, animal health, welfare and identification, and private property rights issues. The USCA had earlier expressed
concern about the cost of the additional regulatory requirements adopted to address food safety concerns when Korea’s
protocol pertaining to U.S. beef imports was negotiated in April 2008. R-CALF USA, with a claimed membership of
over 12,000, represents cattle producers on domestic and international trade and marketing issues. R-CALF was created
in 1998 to pursue three trade cases and has taken a more skeptical approach to the Bush and Obama Administrations’
trade policies, concerned about the impact of cattle and beef imports on the economic well-being of cattle ranchers.
15 The AMI, according to its website, is a national trade association representing companies that process 95% of the red
meat in the United States, and their suppliers throughout America. The NMA, based in California, is a smaller trade
association with about 225 member companies. Members include equipment manufacturers and food suppliers who
(continued...)
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U.S.-South Korea Beef Dispute: Issues and Status
Implementation of 2008 Beef Access Agreement
Administrative Steps Taken
In accordance with the beef agreement, as modified by the June 2008 private-sector arrangement,
South Korea on June 26, 2008, published rules to put the beef agreement into effect, and began to
inspect U.S. beef shipments held in cold storage in Korea since the fall of 2007. Shortly
thereafter, USDA agencies began implementing the procedures adopted to ensure that U.S. beef
meets Korea’s import requirements. Under these terms, each U.S. beef shipment to Korea must be
accompanied by an export certificate issued by USDA’s Food Safety and Inspection Service
(FSIS) that confirms the U.S. beef establishment participates in two programs administered by
USDA’s Agricultural Marketing Service (AMS).16 The first is that beef and products destined for
South Korea must be produced under an approved Export Verification (EV) program. This details
the specific product requirements that a supplier must meet in order for an export shipment to be
eligible to enter Korea. Currently, AMS lists 58 suppliers as covered by the EV program for
Korea.17 The second is the voluntary Quality System Assessment (QSA) program that verifies
that beef from a participating plant is from cattle under 30 months of age. Currently, AMS has
approved 54 exporting establishments as eligible to ship beef product that can be certified as
meeting this requirement.18
Beef Sales Under the Agreement
To meet initial consumer demand following the reopening of South Korea’s market to U.S. beef,
shipments accelerated from mid-July 2008 through early October 2008 to supply regional
wholesale markets and such retail sales outlets as local traditional butcher shops and online
stores. With the build-up among importers of unsold inventories, export shipments then fell
through year-end 2008. Perceiving a change in consumer sentiment towards U.S. beef, three large
Korean discount retail chains began selling U.S. beef in late November 2008. Sales of U.S. beef
in these major sales outlets were strong in December, largely due to discount pricing (Figure 4
and Figure 5).
For 2008 as a whole, U.S. beef exports to South Korea totaled $294 million (Figure 1) or 57,269
MT (Figure 2). Of this total, sales of bone-in beef products (previously prohibited) were $118
million. Compared to 2007, these U.S. beef exports were 148% higher in value and 128% greater
in quantity. Even though sales occurred for only half the year, South Korea ranked as the fourth-
largest market for U.S. beef. For 2008 as a whole, the U.S. market share of all of Korea’s beef
imports rose to 15%, up from 6% in 2007.
(...continued)
provide services to the meat industry.
16 See USDA, FSIS, “Export Requirements for the Republic of Korea,” as updated September 10, 2010, available at
http://www.fsis.usda.gov/regulations_&_policies/Republic_of_Korea_Requirements/index.asp.
17 “Official Listing of Eligible Suppliers to the USDA Bovine EV Programs,” as updated September 9, 2010, at
http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRD3105269.
18 “Official Listing of Approved Suppliers for the USDA QSA Program for Korea and Taiwan,” revised September 9,
2010, at http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5070251.
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In 2009, U.S. beef sales to South Korea totaled $216 million (Figure 1) or 55,633 MT (Figure 2).
Compared to 2008, these exports were lower by nearly 27% in value and 3% in quantity. South
Korea again ranked as the fourth-largest destination for U.S. beef in dollar terms. The U.S.
market share further increased to 26%, at the expense of Australia and New Zealand.
Exports fell in the first quarter of 2009, as importers worked down their inventories of frozen
U.S. beef that had entered earlier. One positive development was the decision of large department
store chains (another major marketing outlet) to resume sales. This reflected an acknowledgment
by these other retailers that public opposition to U.S. beef had eased, with no significant problems
reported since sales had begun at the discount retail stores. In the second and third quarters of
2009, U.S. beef exports to South Korea stabilized at a lower level, in part due to household
decisions to tighten spending (i.e., less restaurant dining, where U.S. beef would frequently be
consumed) in response to the uncertainty caused by Korea’s economic recession (Figure 4 and
Figure 5). The availability of cheaper Australian beef because of the Australian dollar’s more
favorable exchange rate against the Korean won also reduced the price-competitiveness of U.S.
beef during this period. USDA reported that imports were slowed by the difficulties that
importers experienced in securing credit due to the financial squeeze and the weak won relative to
the U.S. dollar, and by “ample” inventories of U.S. beef sitting in cold storage. It also attributed
the slower pace of sales to the lingering negative image of U.S. beef among Korean consumers.19
Figure 4. Value of U.S. Beef Exports to South Korea, Quarterly
(2001 to mid-2010)
300
250
200
rs
la
150
llion dol
mi
100
50
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: Derived by CRS from Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics.
Notes: Includes boneless and bone-in cuts, beef variety meats, and processed beef products (through 2003).
19 USDA, Foreign Agricultural Service, South Korea’s “Livestock and Products Annual,” GAIN Report KS9041,
September 1, 2009, pp. 5, 9.
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U.S.-South Korea Beef Dispute: Issues and Status
Figure 5. Quantity of U.S. Beef Exports to South Korea, Quarterly
(2001 to mid-2010)
80,000
70,000
60,000
50,000
s
n
to
c
40,000
tri
e
m
30,000
20,000
10,000
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: Derived by CRS from Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics.
Notes: Includes boneless and bone-in cuts, beef variety meats, and processed beef products (through 2003).
For 2010, USDA estimates that U.S. beef exports to South Korea will reach about 78,000 MT,
nearly a one-third increase over the 2009 export level of 59,000 MT.20 U.S. beef shipments this
year would constitute 34% of total South Korean beef imports, a noticeable increase from the
26% share posted in 2009.21 Through July 2010, U.S. beef (boneless and bone-in) exports more
than doubled compared to the same seven-month period in 2009 (51,400 MT versus 24,560 MT)
(Figure 2). In value terms, U.S. beef exports through July 2010 were 162% higher than in the
same period last year ($291 million versus $111 million) (Figure 1). South Korea continues to
rank globally as the fourth-largest market for U.S. beef. The U.S. market share of Korean beef
imports from all major suppliers through July 2010 stood at 30%, up from a 24% share in the
same seven-month period in 2009 (Figure 3).22
Promotional efforts to rebuild consumer confidence in U.S. beef and much lower retail prices for
imported beef than for Korean beef contributed to the continued growth in U.S. beef sales during
the first half of this year (see Figure 4 and Figure 5). Since December 2009, the U.S. Meat
Export Federation (USMEF) has conducted a “Trust Campaign” to rebuild consumer confidence
in U.S. beef using television and newspaper advertisements and other promotional activities.
Major Korean “hypermarkets”—superstores that combine a supermarket with a department
store—have engaged in aggressive marketing efforts that are reported to have increased U.S.
beef’s share of imported beef sold by these stores. Retail prices for Korean-produced beef on
20 This estimated quantity is expressed on a product weight equivalent basis to correspond more closely to the
quantities recorded for U.S. beef exports as discussed in “U.S. Beef Exports to South Korea” and shown in Figure 2
and Figure 3. The 2010 estimate is derived by CRS using a conversion factor from the 110,000 MT carcass weight
equivalent published in USDA, Foreign Agricultural Service, South Korea’s “Livestock and Products Annual,” GAIN
Report KS1023, September 10, 2010, p. 9.
21 USDA, FAS, GAIN Report KS1023, September 13, 2010, pp. 3, 6.
22 Derived from online statistics database maintained by Korea International Trade Association at http://www.kita.org.
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average lately have been 2 to 2½ times more expensive than imported beef. Though U.S. beef
sales have increased, USDA reports that “there are still a sizeable percentage of fence sitting
consumers who haven’t started buying U.S. beef again.” To win these consumers back, marketing
efforts are being targeted toward this group. Also, while the more upscale restaurants are selling
U.S. beef, smaller establishments “are still a bit reluctant to include it on their menus for fear of
losing customers.” To respond, the USMEF plans additional marketing efforts to reach these
smaller restaurants.23
For 2011, USDA projects that U.S. beef exports to South Korea could reach about 97,000 MT
product weight equivalent24—24% higher than its 2010 beef export estimate, as consumer
demand is expected to rise. This amount would account for an estimated 40% of projected Korean
beef imports from all major country suppliers.25
Impact of Beef Protests on Bilateral Relations and
the KORUS FTA
Although the protests against the beef agreement subsided in the summer of 2008, they have had
lingering effects on U.S.-South Korean relations because of their erosion of President Lee’s
standing early in his term and because of their possible effects on the ratification of the KORUS
FTA. The protests damaged the President’s political strength and boosted the position of
opposition groups that had been demoralized before the candlelight vigils. In the late summer of
2008, Lee’s approval ratings recovered from the trough they entered at the height of the protests,
but for months they remained at a low level (in the mid-20% to 30% range).26 Thus, the uproar
over Lee’s decisions on beef effectively ruined his “honeymoon” period to push many of his
policy goals. It was not until late 2009 that Lee’s poll numbers began to exceed 40% fairly
consistently.
Perhaps most significantly for the United States, the beef protests have meant that President Lee
is likely to have less political capital—let alone political will—to make the changes that the
Obama Administration is likely to seek in the KORUS FTA. Lee has made securing passage of
the KORUS FTA a priority, both for South Korea’s economic competitiveness and for revitalizing
the U.S.-South Korean alliance. However, the domestic uproar in Korea following the April 2008
beef deal increased the perception among many South Koreans that Lee is overly solicitous
toward the United States. This vulnerability could make it less likely that Lee would be willing or
able to accept the changes the Obama Administration has said would be necessary before it will
consider submitting the KORUS FTA to Congress.27 In December 2008 and January 2009, South
Korean opposition parties physically and procedurally blocked a vote on the KORUS FTA from
being taken in the National Assembly. The opposition agreed to end its boycott in exchange for a
23 Ibid., USDA, GAIN Report KS1023, September 13, 2010; GAIN Report KS1003, February 26, 2010, pp. 4-5.
24 See footnote 20 for explanation.
25 Ibid., USDA, GAIN Report KS1023, September 13, 2010.
26 See, for instance, JoongAng Ilbo (Internet Version in English), “President Lee’s Approval Rating Starts to Pick Up,”
August 25, 2008; Martin Fackler, “South Korea Losing Faith in ‘Ceo’ Leader and Ally,” The New York Times,
November 1, 2008.
27 Replies to Questions for the Record from Senator John Kerry on the Nomination of Hillary Rodham Clinton,
Secretary of State, January 2009, available at http://www.foreignpolicy.com/files/KerryClintonQFRs.pdf.
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promise not to call for a committee vote until later in 2009. In April 2009, the National
Assembly’s Foreign Affairs, Trade and Unification Committee favorably reported the KORUS
FTA ratification bill to the full legislature. In its current form, the KORUS FTA has broad support
within the National Assembly, which is controlled by President Lee’s ruling Grand National
Party.
Options Under Consideration
Concluding the 2008 bilateral beef agreement was considered a significant step forward in the
U.S. government’s 4½-year effort to regain access to South Korea’s lucrative beef market for the
U.S. cattle and beef processing sectors. It was intended to resolve an issue that some Members of
Congress said stood in the way of congressional consideration of legislation to implement the
KORUS FTA. While Korea’s lifting of the beef ban was widely regarded as a politically
necessary condition for the Bush Administration to send this trade agreement to Congress, it has
since become a less sufficient condition, because of other opposition to the KORUS FTA (e.g.,
over its auto trade provisions) and increased opposition to FTAs in general.
Since President Obama’s announcement on June 26, 2010, of his intent to present implementing
legislation for the KORUS FTA to Congress “in the few months” after the November 2010 G-20
meeting in Seoul, the Administration has continued to consult with Congress and stakeholders on
how to resolve outstanding matters related to access for U.S. beef in the South Korean market.
Discussions have focused on what would constitute access for U.S. beef, as spelled out in the
signed April 2008 protocol. These consultations are expected to serve as the basis for the U.S.
proposals to be presented to Korean officials. These initial talks have not yet been scheduled.
The issue facing U.S. negotiators is how and at what pace the United States can get South Korea
to accept all U.S. beef , irrespective of the age of the cattle when slaughtered. However, the
requirement that U.S. exporters remove specified risk materials suspected of causing mad cow
disease during processing is not at issue. At the same time, U.S. negotiators face pressure to
balance this objective with other negotiating initiatives to expand upon or regain market access
for U.S. beef in such important Asian markets as Japan, Taiwan, and China.28
Administration officials have stated that their objective is “to eventually secure full market access
for U.S. beef ” that reflects South Korea’s recognition that the United States meets OIE standards.
However, public statements made by U.S. Trade Representative Ron Kirk and USDA
Undersecretary Jim Miller have raised the possibility that the Administration may not require
achieving this objective before the KORUS FTA is sent to Congress, and instead may seek to
secure commitments from South Korea to move in steps toward that goal.29
Senator Baucus, chairman of the Senate Finance Committee (which would consider a bill to
approve and implement the KORUS FTA) has stated that he wants access for all U.S. beef and
28 At present, Japan accepts U.S. beef, veal, beef offal, and veal offal from animals 20 months of age or younger.
Taiwan allows the entry of U.S. boneless and bone-in beef, and other specified beef products, from cattle less than 30
months of age that meet specified requirements on being born and/or raised for a minimum time period in the United
States. China does not allow the entry of any U.S. beef, beef products, and tallow.
29 Inside U.S. Trade, “U.S. Deliberating on Strategy, Possible ‘Beef Triggers’ for Korea FTA,” August 6, 2010, pp. 1,
24-25.
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cuts from cattle of any age as a condition for considering and ratifying the KORUS FTA. His
statements stress that the OIE has determined that U.S. beef from cattle irrespective of age can be
safely imported, and that 60 countries now recognize this in accepting U.S. beef. Baucus has
continued to reiterate that his objective is to see that U.S. beef access in all markets be based on
internationally accepted rules, arguing that allowing an FTA partner such as Korea not to follow
OIE guidelines would set a “dangerous precedent.”30 Another approach, according to Senator
Grassley, ranking member of the Finance Committee, would be to pursue efforts to secure
additional beef access “in parallel to the FTA approval process.”31
Much of the U.S. cattle and beef industry wants to see the KORUS FTA take effect soon in order
to realize the benefit of the reduction in South Korea’s 40% tariff on beef muscle cut imports. The
industry points to the fact that U.S. beef exports continue to grow, and that the U.S. market share
of Korea’s beef import market is increasing.32 Industry spokesmen have expressed some
apprehension about losing these gains, if U.S. negotiators push South Korea too quickly for full
beef access. Their stance may reflect a desire to avoid a repeat of the street protests that occurred
in May 2008, to preclude a public and official perception that the United States is again
pressuring South Korea for a policy change. The U.S. beef sector likely would view such a
scenario as undercutting the aggressive market promotion efforts made since late 2008 to assure
Korean consumers of the safety of U.S. beef, which it views as having contributed to the increase
in U.S. beef exports. Others also have mentioned that securing tariff reductions for U.S. beef
would provide a price advantage with respect to beef supplied by Australia and New Zealand,
which are likely seeking similar tariff cuts as both countries negotiate FTAs with South Korea.
With USDA’s Miller mentioning that negotiators might look at interim steps to expand access for
U.S. beef in South Korea’s market as the basis for resolving this issue, various ideas and/or
possible triggers to accomplish this have surfaced. One would be to bring processed beef products
under the coverage of the current “voluntary arrangement.” This would allow U.S. exporters to
participate in what currently is a $75 million market in South Korea. Another approach would
involve agreeing to triggers that would provide for a transition from the current voluntary
arrangement to full compliance with the April 2008 agreement. Such triggers could include (1) no
discoveries of additional cases of BSE in U.S. cattle during some future time period (i.e., 3, 5, 10
years); (2) no reports of violations of the terms of the industry, or “voluntary,” arrangement for
some stated time period; (3) U.S. beef exporters reaching a specified share of Korea’s beef import
market; and/or (4) a change in OIE’s risk assessment of the U.S. beef sector from “controlled
risk” to “negligible risk.” Some of these precedent-setting triggers could create concerns that in
the future might undermine U.S. efforts to expand exports of other meat products, or to protect
export gains that have already been achieved. Should U.S. and Korean negotiators agree to some
changes, this would not require a re-opening of the FTA text. Any modification could be handled
in an addendum letter to the April 2008 protocol or by some changes in the protocol text itself.
30 Inside U.S. Trade, “Baucus Calls On South Korea To Fully Adhere To OIE Guidelines On Beef,” July 23, 2010;
BNA, International Trade Reporter, “Kirk Says Working for Full OIE Compliance From Korea on Beef; Baucus Seeks
Results,” August 12, 2010.
31 Inside U.S. Trade, “U.S. Deliberating on Strategy, Possible ‘Beef Triggers’ for Korea FTA,” August 6, 2010, p. 25.
32 If the agreement had taken effect on January 1, 2010, the reduced tariff of 37.3% would have resulted in a savings of
almost $11 million to U.S. exporters in the first year. CRS derived this savings, applying the almost 2.7% tariff
reduction to an estimate of $400 million in U.S. beef sales to South Korea in 2010.
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U.S.-South Korea Beef Dispute: Issues and Status
Author Contact Information
Remy Jurenas
Mark E. Manyin
Specialist in Agricultural Policy
Specialist in Asian Affairs
rjurenas@crs.loc.gov, 7-7281
mmanyin@crs.loc.gov, 7-7653
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