Overview of U.S.-South Korea Agricultural Trade

Overview of U.S.-South Korea Agricultural Trade

Overview of U.S.-South Korea Agricultural
Trade
-name redacted-
Analyst in Agricultural Policy
August 8, 2018
Congressional Research Service
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R45285

SUMMARY

R45285
Overview of U.S.-South Korea Agricultural
August 8, 2018
Trade
-na-e redacted-
South Korea is an important export market for U.S. agricultural products. In 2017, U.S.
Analyst in Agricultural
farmers and ranchers sold about $7 billion of goods to South Korea, making it the sixth-
Policy
largest export market by value for U.S. agricultural products. Leading U.S. agricultural
-re-acte--@crs.loc.gov
exports to South Korea include beef, corn, soybeans, pork, wheat, oranges, nuts, and
cheese. Further, the United States had a trade surplus of more than $6.3 billion in food
For a copy of the full report,
please call 7-.... or visit
and agricultural products with South Korea in 2017.
www.crs.gov.
The trading relationship between the two countries has been governed by the U.S.-South
Korea Free Trade Agreement, known as KORUS, since it took effect in 2012. The bilateral free trade agreement
(FTA) reduces, and in many cases eliminates, tariff and nontariff barriers between the United States and South
Korea. South Korea’s agriculture sector is highly protected—its agricultural tariffs average 57%—but through
KORUS, South Korea immediately granted duty-free status to almost two-thirds of U.S. agricultural product
exports. In March 2018, the Trump Administration and South Korea reached an agreement in principle on
modifications to KORUS. These changes reportedly did not address agricultural provisions.
The value of U.S. agricultural exports to South Korea
U.S.-South Korea Agricultural Trade
almost tripled in nominal dollars between 2000 and
2017, increasing from $2.5 billion to $7 billion. From
2009 to 2011—the three years prior to the
implementation of KORUS—U.S. exports to South
Korea averaged about $5.4 billion. In the three years
following the implementation of the FTA, 2012-2014,
U.S. exports to South Korea averaged about $6
billion—a 12% increase. The value of U.S. exports to
South Korea has continued to grow since then,
averaging about $6.4 billion from 2015 to 2017.
Because South Korea is reliant on food imports and
has a growing middle class, it could be a growth
market for U.S. agricultural exports.

Source: USDA Global Agricultural Trade System (GATS),
Although market access for U.S. agricultural exports
Foreign Agricultural Trade of the United States (FATUS)
to South Korea has generally increased under
product group. Data are in nominal dollars.
KORUS, certain issues may prevent the export of
specific products. The Korean government’s policies regarding certain plant pests and diseases have limited
exports of U.S. cherries, potatoes, blueberries, apples, and pears. Further, South Korea’s regulatory system for
genetically engineered crops makes it difficult to introduce certain new U.S. crops. Moreover, long-standing
South Korean protections on rice, which it considers necessary for national food security and which were not
addressed in KORUS, allow imports of only a small amount of U.S. rice. Finally, new rules on pesticide residues
on crops, animal drug residues in meat, and carcinogenicity labeling for alcoholic products also act as potential
barriers to expanding trade in these products.
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Contents
U.S.-South Korea Agricultural Trade under KORUS ...................................................................... 1
Market Access and Tariffs ......................................................................................................... 2
Technical and Other Barriers to Trade ...................................................................................... 4
U.S.-South Korea Agricultural Trade .............................................................................................. 4
U.S. Agricultural Imports from South Korea ............................................................................ 5
U.S. Agricultural Exports to South Korea ................................................................................. 5
Beef ..................................................................................................................................... 7
Pork ..................................................................................................................................... 9
Corn .................................................................................................................................... 9
Oranges ............................................................................................................................... 9
Tree Nuts ........................................................................................................................... 10
Cheese ............................................................................................................................... 10
2018 Update of KORUS .......................................................................................................... 11
Issues in U.S.-South Korea Agricultural Trade .............................................................................. 11
New Crop Approvals and Acceptance ...................................................................................... 11
Fruit Market Access ................................................................................................................ 12
Potato Access .......................................................................................................................... 13
Changing Maximum Residue Limit Requirements ................................................................. 13
Access for U.S. Rice ............................................................................................................... 14
Carcinogenicity Labeling for Alcoholic Beverages ................................................................ 14
Competition from South Korea’s Other FTAs............................................................................... 14
Congressional Interest ................................................................................................................... 15

Figures
Figure 1. U.S.-South Korea Agricultural Trade ............................................................................... 5
Figure 2. U.S. Exports to South Korea by Commodity ................................................................... 6
Figure 3. U.S. Beef Exports to South Korea ................................................................................... 8

Tables
Table 1. Tariffs for Selected U.S. Agricultural Exports Under KORUS ......................................... 3
Table 2. Leading U.S. Exports to South Korea ............................................................................... 7

Contacts
Author Contact Information .......................................................................................................... 15
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Overview of U.S.-South Korea Agricultural Trade

outh Korea is the United States’ sixth-leading export market for agricultural products.1 U.S.
farmers and ranchers sent almost $7 billion worth of agriculture and food products to South
S Korea in 2017, accounting for 5% of total U.S. agricultural exports.2 Meanwhile, the
United States imported about $548 million in agriculture and food products from South Korea in
2017, accounting for 0.5% of U.S. agricultural imports. As a result, the United States had a trade
surplus in agricultural products of more than $6.3 billion with South Korea in 2017.
U.S. agricultural trade with South Korea is governed by the U.S.-South Korea Free Trade
Agreement, known as KORUS, which took effect in 2012. The free trade agreement (FTA) allows
for largely open access for goods entering each market. In 2018, the Trump Administration
negotiated certain modifications to KORUS, but the announced changes do not affect agricultural
provisions of the FTA.
South Korea is a promising export market for U.S. farmers and ranchers who are looking to trade
to boost the value and sales of agricultural products—about 20% of U.S. farm income is due to
trade, according to the U.S. Department of Agriculture.3 South Korea has little arable land, thus it
is largely dependent on food imports. At the same time, its growing middle class is increasingly
buying higher-value food products, making it a potential growth market for U.S. meat and other
value-added agricultural goods.
Although the United States and South Korea trade a wide range of products and services, this
report provides only an overview of U.S.-South Korea agricultural trade, including details of key
agricultural products and issues affecting U.S. exports.4
U.S.-South Korea Agricultural Trade under KORUS
KORUS is a bilateral FTA that reduces—and, in many cases, eliminates—tariff and nontariff
barriers between the United States and South Korea. The agreement applies to manufactured
goods, agricultural products, and services. It includes rules on investment, worker treatment, and
environmental standards, and provides mechanisms for resolving disputes (see text box).5
KORUS is the second-largest U.S. FTA as measured by trade flows after the North American Free
Trade Agreement (NAFTA). It is also the most recently negotiated U.S. FTA. Although many of
the tariff reductions and other provisions of the agreement became effective in 2012, others are
being phased in within 20 years. The FTA remains in force in perpetuity unless the two countries
agree to changes or a party withdraws.
South Korea’s agriculture sector is highly protected—its agricultural tariffs average 57%. As part
of KORUS, South Korea immediately granted duty-free status to almost two-thirds of U.S.

1 This report uses the USDA Foreign Agricultural Service’s (FAS’s) definition of agricultural products, which includes
most of chapters 1-24 of the U.S. Harmonized Tariff Schedule. The chapters included in the definition cover meat,
grains, animal feed, dairy, horticultural products, processed food, and unprocessed tobacco. The FATUS definition
does not include seafood in chapter 3 and processed seafood in chapter 16. It also doesn’t include spirits in Chapter 22
and manufactured tobacco products in Chapter 24. Certain other products outside of Chapters 1-24 are also considered
agricultural products, including essential oils in Chapter 33, raw rubber in Chapter 40, raw animal hides and skins in
Chapter 41, and wool and cotton in Chapters 51 and 52. For the full definition, see https://apps.fas.usda.gov/gats/
AgriculturalProducts.aspx.
2 USDA Global Agricultural Trade System (GATS), May 15, 2018.
3 USDA Foreign Agricultural Service, “U.S. Farm Exports Hit Third-Highest Level on Record,” press release,
November 16, 2017.
4 For an overview of KORUS, see CRS In Focus IF10733, U.S.-South Korea FTA (KORUS).
5 For the text of KORUS, see https://ustr.gov/trade-agreements/free-trade-agreements/korus-fta/final-text.
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agricultural products.6 Tariffs and import quotas on most other agricultural goods are to be phased
out over time. In total, U.S. agricultural products accounted for about $7 billion of the almost $27
billion in farm and food products that South Korea imported in 2017.7
Trade Liberalization Under KORUS

Tariff and quota elimination. Eliminated some trade restrictions immediately, while others were phased
out in time frames up to 20 years. Set temporary safeguards to protect South Korean beef, pork, and some
fruits and vegetables. Put in place tariff-rate quota (TRQ) for U.S. dairy imports.

Sanitary and phytosanitary (SPS) measures. Established a Committee on Sanitary and Phytosanitary
Measures to enhance regulatory cooperation and facilitate trade. The committee has been the venue for
addressing plant pest and disease concerns that could prevent South Korean imports of certain U.S. fruits and
vegetables, among other issues.

Rules of origin. Establishes rules on whether a product is considered to have originated in the United States
or South Korea and therefore eligible for the KORUS tariff benefits. Sets limits for how much of a product
can be composed of ingredients produced elsewhere and still qualify for KORUS tariffs.

Treatment of foreign investors. Requires signatories to treat covered investments and investors no less
favorably than domestic investors and investments.

Formal dispute resolution mechanism. Establishes a panel to adjudicate disputes between the two
countries under the agreement if consultations do not lead to a resolution.
Sources: KORUS Chapter 3 (Agriculture), Chapter 2 (National Treatment and Market Access for Goods),
Chapter 11 (Investment), Chapter 22 (Institutional Provisions and Administration), and Annex 6-A (Specific
Rules of Origin).
Market Access and Tariffs
Under KORUS, South Korea immediately eliminated tariffs on a range of agricultural products,
including, for example, animal hides and skins, cherries, cotton, orange juice, pistachios, and
wine, among many other items. It also initiated a phasing out of tariffs on goods such as beef and
pork. Table 1 shows examples of how tariffs are phased out on a variety of different products. To
protect South Korean farmers and ranchers during the phaseout period, South Korea included
temporary safeguards and TRQs for some key products, while the United States negotiated a TRQ
for the import of dairy products from South Korea.8 Under KORUS, if U.S. exports to South
Korea exceed the safeguard level or TRQ, they are subject to higher tariffs—in some cases as
much as South Korea’s applied most favored nation (MFN) rate, or the rate that applies to all
countries not under an FTA or other preferential trading arrangement.9

6 CRS Report RL34330, The U.S.-South Korea Free Trade Agreement (KORUS FTA): Provisions and Implementation.
7 USDA Foreign Agricultural Service (FAS), Republic of Korea Exporter Guide 2017, GAIN Report KS 1740,
November 21, 2017.
8 A TRQ is a two-part tool used by countries to protect sensitive agricultural and food products. The quota component
provides for duty-free access of a specified quantity of a commodity, which under an FTA may be allowed to expand
over time. Imports above this quota are subject to a higher tariff rate. A safeguard protects against import surges well
above current trade levels as those products transition to free trade.
9 MFN rates apply to products traded between all World Trade Organization (WTO) members unless another
agreement is in place between the trading countries. MFN rates generally reflect the highest (most restrictive) rates that
WTO members can charge each other on imported goods and services.
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Table 1. Tariffs for Selected U.S. Agricultural Exports Under KORUS
Percentage
Year 1 (2012)
of 2017 U.S.
Tariff and
Full
Most
Agricultural
Safeguard or
2018 Tariff and
Implementation
Favored
exports to
TRQ (if
Safeguard or TRQ (2027) Tariff and
Nation
South Korea
Product
applicable)
(if applicable)
Safeguard
Tariff
by Value
Beef
37.3% for up to
21.3% for up to
0% and unlimited
40%
17%
270,000 metric ton
306,000 MT
(MT)
30% for more than
40% for more than
306,000 MT
270,000 MT
Oranges
0% for up to 2,500
0% for up to 2,985
0% for up to
50%
3%
MT from Sept. 1-
MT from Sept. 1-end
3,895.2 MT from
end of February.
of February. 50% for
Sept. 1-end of
50% for more than
more than 2,985 MT
February. 50% for
2,500 MT
0% and unlimited
more than 3,895.2
30% from March 1-
from March 1-Aug.
MT
Aug. 31
31
0% and unlimited
from March 1-Aug.
31
Pork

Fresh
20.25% for up to
6.75% for up to
0% and unlimited
22.5%
0.2%
8,250 MT
11,703 MT

22.5% for more
14.6% for more than

than 8,250 MT
11,703 MT
Frozen
25%
0%
0%
25%
6%
Nuts

Almonds
0%
0%
0%
8%
2.4%
Walnuts
30%
0%
0%
30%
1.3%
Corn
0%
0%
0%
328%
10.2%
Cattle Hide
0%
0%
0%
3%
2%
Wine
0%
0%
0%
15%
0.3%
Source: World Trade Organization (WTO) tariff database, KORUS text, USDA GATS. Data as of May 3, 2018.
1 MT (metric ton) = 2,205 pounds. All Korean import tariffs are ad valorem.
Notes: The following harmonized tariff system (HTS) codes cover each product: beef: 0201.10, 0201.20,
0201.30, 0202.10, 0202.20, 0202.30; oranges: 0805.10; fresh pork: 0203.19; frozen pork: 0203.29; almonds:
0802.12; walnuts: 0802.32; corn: 1005.90.20; cattle hides: 4101.50.10; and wine: 2204.20. These products
account for about 40% of U.S. exports to South Korea.
a. South Korea has a 10 MMT duty-free quota on feed corn imports, an amount that largely equals domestic
consumption. Only once that quota is filled does the 328% tariff apply.
Similarly, the United States eliminated tariffs on almost all agricultural product imports from
South Korea, although it does have a TRQ in place until 2021 for dairy products and prepared
foods and drinks containing dairy. Currently 358 MT of these products can be imported duty free
into the United States from South Korea. These products accounted for 6% of the value of U.S.
agricultural imports from South Korea.
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Technical and Other Barriers to Trade
KORUS largely focuses on reducing tariffs to provide market access for U.S. and South Korean
agricultural goods. However, the FTA created a Committee on Sanitary and Phytosanitary Matters
as a venue to discuss SPS issues and other trade barriers (see “Issues in U.S.-South Korea
Agricultural Trade”).10 The SPS committee follows the provisions of the WTO’s 1995 Agreement
on the Application of SPS Measures,11 which aims to guide countries to resolve bilateral SPS
disputes that arise, coordinate technical assistance programs, and consult on issues and positions
in the WTO and other international bodies where SPS issues are considered.12 Similar committees
exist in other U.S. FTAs, including the North American Free Trade Agreement. The committee
has been the venue for discussion of, among other things, pest issues that are preventing South
Korean imports of certain U.S. fruits and vegetables and U.S. questions over South Korea’s new
maximum residue levels (MRLs) for pesticides and animal drugs on imports.
U.S.-South Korea Agricultural Trade
South Korea is the sixth-leading market for U.S. agricultural exports by value, behind Canada,
China, Mexico, Japan, and the European Union (EU). U.S. farmers, ranchers, and food
manufacturers exported almost $7 billion of agricultural goods and food to South Korea in 2017,
accounting for 5% of total U.S. agricultural export value that year.13
The United States is the top foreign supplier of agricultural imports by both value and quantity to
South Korea, according to South Korea Customs data.14 U.S. food and agriculture products
accounted for 28% of the value of South Korea’s agricultural imports in 2017.
Meanwhile, the United States imported $548 million in agricultural products from South Korea in
2017, accounting for 0.5% of total U.S. agricultural imports that year, resulting in a U.S.
agricultural trade surplus of more than $6.3 billion (see Figure 1).

10 SPS measures are the laws, rules, standards, and procedures that governments employ to protect humans, animals,
and plants from diseases, pests, toxins, and other contaminants. Examples include meat and poultry processing
standards to reduce pathogens, residue limits for pesticides in foods, and regulation of agricultural biotechnology. For
more details on SPS trade barriers, see CRS Report R43450, Sanitary and Phytosanitary (SPS) and Related Non-Tariff
Barriers to Agricultural Trade.
11 The WTO’s 1995 Agreement on the Application of SPS Measures sets out the basic rules for ensuring that each
country’s food safety and animal and plant health laws and regulations are transparent, scientifically defensible, and
fair. For more information on the agreement, see WTO, “The WTO Agreement on the Application of Sanitary and
Phytosanitary Measures (SPS Agreement),” https://www.wto.org/english/tratop_e/sps_e/spsagr_e.htm.
12 For more information, see CRS Report RL34330, The U.S.-South Korea Free Trade Agreement (KORUS FTA):
Provisions and Implementation.
13 USDA Global Agricultural Trade System (GATS), May 15, 2018.
14 Global Trade Atlas, May 15, 2018.
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Figure 1. U.S.-South Korea Agricultural Trade

Source: USDA Global Agricultural Trade System (GATS), Foreign Agricultural Trade of the United States
(FATUS) product group. Data are in nominal dollars.
U.S. Agricultural Imports from South Korea
U.S. agriculture and food imports from South Korea are largely in the form of noodles and other
prepared foods and beverages. Grain-based foods and ingredients—including pasta and noodles,
biscuits, and rice flour—are the highest-value category of U.S. imports from South Korea,
accounting for about $165 million in 2017. The United States also imported about $115 million in
fresh and prepared fruits and nuts, roughly $74 million in juice and other beverages, and nearly
$63 million in teas, soups, condiments, and honey that year.
The value of U.S. imports of South Korean food products has increased from about $115 million
in 2000 to about $548 million in 2017. From 2009 to 2011—the three years prior to the
implementation of KORUS—U.S. imports of South Korean food products averaged $292 million.
In the three years following the implementation of the FTA, 2012-2014, U.S. imports of South
Korean food products averaged $421 million—a 44% increase. The value of U.S. imports of
South Korean food products has continued to grow since then, averaging about $514 million from
2015 to 2017. U.S. imports of South Korean noodles, which account for 20% of the value of U.S.
imports from South Korea, have increased in volume from about 6,246 MT in 2011 to 18,503 MT
in 2017.15
U.S. Agricultural Exports to South Korea
South Korea is by value the United States’ second-leading export market for beef, the fourth
largest for corn and pork, and the fifth largest for dairy products.16

15 These products are covered by HTS Code 1902.30.
16 USDA GATS, May 15, 2018.
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The value of U.S. agricultural exports to South Korea almost tripled between 2000 and 2017,
increasing from about $2.5 billion to about $7 billion (see Figure 2), growth that has coincided in
part with trade liberalization under KORUS. From 2009 to 2011—the three years prior to the
implementation of KORUS—U.S. exports to South Korea averaged about $5.4 billion. In the
three years following the implementation of the FTA, 2012-2014, U.S. exports to South Korea
averaged about $6 billion—a 12% increase. The value of U.S. exports to South Korea has
continued to grow since then, averaging about $6.4 billion from 2015 to 2017. That growth has
occurred despite an initial decline in U.S. agricultural exports to South Korea following the
implementation of KORUS. The decline was due largely to a lower-than-anticipated volume of
corn exports in 2013 and the slowing of the South Korean economy.17
Figure 2. U.S. Exports to South Korea by Commodity

Source: USDA (GATS) reflecting FATUS product groupings. Data are in nominal dollars.
U.S. exports to South Korea have been strong in recent years in response to rising consumer
demand for prepared and consumer-oriented foods, including fruits and nuts, cheese and dairy
products, beef, and other prepared foods, according to USDA.18 South Korea imported about $3.7
billion in U.S. consumer-oriented agricultural products in 2016.19

17 USDA FAS, U.S. Agriculture Reaps Benefits of Free Trade Agreement with Korea, December 18, 2017.
18 USDA FAS, Republic of Korea Retail Foods Biennial Report 2017, GAIN Report KS1729, September 26, 2017.
19 Ibid.
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U.S. farmers and ranchers export a variety of products to South Korea (see Table 2).
Table 2. Leading U.S. Exports to South Korea
(millions of dollars)
Commodity
2008
2010
2012
2014
2016
2017
Beef
285
495
539
814
1,014
1,149
Corn
2,147
1,416
610
1,046
865
705
Pork
240
172
383
411
346
423
Wheat
526
345
645
412
248
328
Nuts
89
145
262
369
303
315
Soybeans
187
312
395
358
227
294
Citrus fruits
103
135
249
173
226
261
Cotton
125
158
163
208
165
248
Cheese
59
79
160
311
170
213
Soybean Oil
67
32
18
27
66
207
All Other
1,733
2,018
2,607
2,755
2,556
2,953
Products
Total
5,561
5,307
6,031
6,884
6,186
6,889
Source: USDA GATS using FATUS product groupings. Data are in nominal dollars.
Beef
Beef was the top U.S. agricultural export to South Korea in 2017, amounting to about 171,000
MT worth more than $1.1 billion. South Korea is the second-largest market for U.S. beef exports
by value and quantity. The year 2017 marked a high point for the U.S. beef industry, which
worked to regain market share after South Korea banned U.S. beef in December 2003 over
concerns about Bovine Spongiform Encephalitis (BSE, also known as mad cow disease) in the
U.S. herd (see Figure 3).20 Prior to the positive test for BSE, South Korea had been the third-
largest market for U.S. beef exports, importing roughly 206,000 MT worth about $750 million in
2003.
In 2006, South Korea eased the restrictions, allowing imports of small quantities of U.S. boneless
beef from cattle less than 30 months of age.21 In April 2008, South Korea agreed to allow imports
of all cuts of U.S. boneless and bone-in beef and other beef products, regardless of the age of the
animal. However, as a result of backlash by South Korean consumers over the elimination of
import restrictions, a private-sector agreement in June 2008 limited imports of U.S. beef to
products from cattle of less than 30 months of age until such time as Korean consumer confidence

20 In December of 2003, BSE was found in a 6-year-old dairy cow in Washington State. Following the discovery, major
foreign markets for U.S. beef—including Japan, South Korea, Mexico, and Canada—put in place either restrictions or
bans on the import of U.S. beef. Canada and Mexico resumed imports in 2004, while Japan and South Korea
maintained their restrictions until late 2006.
21 Older cattle are a higher risk for BSE, though certain mitigation measures are effective in reducing the risk.
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in U.S. beef improves.22 Presently, the 30-month requirement remains in place.23 As part of the
reopening agreement, U.S. beef producers and processors exporting to South Korea must follow
traceability and record-keeping requirements.24 To date, USDA has approved 71 U.S. slaughter
and processing facilities to export beef to South Korea.25
Figure 3. U.S. Beef Exports to South Korea
Metric Tons
U.S. Beef Ban Market Reopens
KORUS Takes Effect

Source: CRS using data from GATS.
South Korean consumers are reportedly regaining confidence in U.S. beef. Polling by the U.S.
Meat Export Federation in December 2017 found that 54% of South Korean consumers were
confident in the safety of U.S. beef, compared with 5% in March 2010. Reflecting this shift in
consumer sentiment, U.S. beef is also regaining market share, according to USDA. Whereas U.S.
exports accounted for 35% of South Korean beef imports by volume in 2015, that share increased
to 46% in 2017. Also, 2017 marked the first year since 2003 that the value of U.S. beef exports to
South Korea exceeded that of Australian beef exports to South Korea.26
Part of the success of U.S. beef in South Korea likely reflects improved terms of trade under
KORUS. The United States currently has a tariff advantage over other major beef exporters,
particularly Australia and Canada, because of reduced tariffs under KORUS. Beef ranked as the
top export to South Korea by value for both the United States and Australia in 2017. Of the
roughly 379,000 MT of beef imported by South Korea in 2017, 47% was shipped from the United
States whereas 46% was from Australia.27 However, in December 2014, the South Korea-
Australia FTA went into force, initiating a reduction of tariffs on Australian beef exports. By

22 For more on the South Korea-U.S. beef negotiations, see CRS Report RL34528, U.S.-South Korea Beef Dispute:
Issues and Status.
23 For more information, see USDA Food Safety and Inspection Service, “Export Requirements for the Republic of
Korea,” accessed June 13, 2018.
24 For more information, see USDA, Agricultural Marketing Service, “QSA LT30 Age Verification Program,” accessed
June 13, 2018.
25 For the full list of approved facilities, see https://www.ams.usda.gov/sites/default/files/media/
LSOfficialListingQSAJapanKoreaTaiwan.pdf.
26 USDA FAS, There’s the Beef (and Pork)! U.S. Red Meat Success in South Korea, GAIN Report KS1817, April 11,
2018.
27 Global Trade Atlas, June 11, 2018.
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2029, neither U.S. nor Australian beef is to be subject to South Korean import tariffs or
safeguards, eliminating the existing U.S. tariff advantage.
Pork
South Korea is the fourth-largest export market for U.S. pork. U.S. producers exported about
164,000 MT of pork products worth roughly $423 million to South Korea in 2017. U.S. pork
exports to South Korea have expanded under KORUS, which phased out a 25% tariff on frozen
pork on January 1, 2014. Frozen pork accounts for the bulk of U.S. pork exports to South Korea.
The volume of U.S. pork exports to South Korea has increased by 9% since 2011, the year before
KORUS took effect. In part, this limited expansion may reflect a slump in total U.S. exports in
2013. That year, South Korea had an oversupply of domestically produced pork, while U.S.
producers were dealing with an outbreak of Porcine Epidemic Diarrhea virus that reduced the
U.S. pork supply.
In addition, U.S. pork exports to South Korea compete with exports from the EU. The South
Korea-EU Free Trade Agreement (KOREU), which went into effect in 2011, also phases out
tariffs on EU pork. However, for many pork products the phaseout periods for the EU extend
beyond those for the United States.28
Corn
U.S. corn producers exported about 4 million metric tons (MMT) of corn valued at roughly $705
million to South Korea in 2017, ranking South Korea as the fourth-largest export market for U.S.
corn. The roughly 4 MMT of U.S. corn exported to South Korea in 2017 was up 74% since 2000,
though it was 32% below its peak level in 2011.29 Part of the decrease from 2011 was due to low
sales in 2012 and 2013, when a drought across the U.S. Midwest curbed U.S. corn production,
reducing supplies for export and increasing prices.
South Korea uses corn largely for animal feed—almost all of U.S. corn exports to South Korea go
to animal feed—though there are also a small amount of food and industrial uses. Domestic
production accounts for less than 1% of the country’s corn consumption. To feed its livestock
sector, South Korea imports about 10 MMT of feed corn each year under a duty-free quota. While
U.S. feed corn does not count as part of the global quota, it also does not benefit from a tariff
advantage. As a result, U.S. feed corn exports to South Korea may fluctuate based on prices of
corn from Brazil, Argentina, and other export competitors.30
Oranges
U.S. orange growers have seen gains in the South Korean market since KORUS took effect, and
ship more oranges to South Korea than to any other country. U.S. oranges have more than a 90%
market share in South Korea.31 According to USDA, about 182,000 MT of U.S. oranges worth
roughly $211 million were exported to South Korea in 2017. Export volume has increased by
more than 31% since 2011, the year before KORUS took effect. South Korea’s orange tariffs vary
by season, and KORUS commitments are likewise season-specific. In January 2018, the 50%
tariff on U.S. orange shipments to South Korea between March 1 and August 31 was eliminated.

28 See GAIN Report KS1817.
29 USDA GATS, May 15, 2018.
30 USDA FAS, Korean Animal Feed to Include More Corn and Wheat, Less Rice, GAIN Report KS1815, April 4,
2018.
31 USDA FAS, Republic of Korea Citrus Annual, GAIN Report KS1746, December 15, 2017.
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Overview of U.S.-South Korea Agricultural Trade

Thus, the bulk of U.S. orange exports take place in that time frame. U.S. oranges that are
exported to South Korea from September 1 until the end of February are currently subject to a
TRQ of 2,985 MT under KORUS. The TRQ increases by 3% each year until 2022, when a
licensing system is to be introduced based on historical imports of U.S. oranges. Imports below
the quota are not subject to a tariff, while those above that amount are subject to a 50% tariff.
Tree Nuts
Since 2011, the amount of U.S. tree nut exports to South Korea has increased by 54%. Those
exports were valued at about $315 million in 2017. Almonds and walnuts account for the majority
of U.S. tree nut sales to South Korea, though it is also a market for U.S. pistachios, pecans, and
hazelnuts.32 KORUS immediately eliminated the 8% tariff on U.S. almonds, whereas the 30%
tariff on shelled walnuts was phased out in 2017. South Korea is the fourth-largest market for
U.S. walnuts, accounting for 5% of the total U.S. amount exported in 2017, and the seventh-
largest market for almonds, accounting for 3% of the total U.S. volume exported in 2017.
Cheese
South Korea ranks as the second-largest market for U.S. cheese exports. U.S. cheese makers sold
about 52,000 MT of cheese worth roughly $213 million to South Korea in 2017. This is up 50%
from 2011 but below the peak of about 71,000 MT valued at roughly $311 million in 2014.
KORUS created duty-free quotas for U.S. fresh, grated or powdered, and processed cheese
exports to South Korea and started to phase out the 36% tariff on imports above the quota. In
2012, the quota was 7,000 MT. In 2018, U.S. cheese makers will be allowed to export 8,358 MT
duty free, but exports above the quota will be subject to a tariff of 19.2%. Cheddar cheese is not
to be subject to the TRQ as of 2021, whereas the TRQ on other cheese products is to be
eliminated in 2026.33
U.S. cheese exports to South Korea face competition from suppliers in the EU. In 2016, the
volume of EU cheese exports to South Korea exceeded U.S. exports to South Korea for the first
time since 2009, according to South Korea Customs data. The KOREU FTA eliminates tariffs and
quotas on EU cheese exports in 2026, much as KORUS does.34
When KOREU was signed, U.S. cheese makers expressed concern that EU rules on geographical
indications (GIs) that were included in the FTA could prevent them from selling certain products
in South Korea.35 The United States does not recognize EU GIs, so U.S. products are free to use
such common names for cheeses as feta, gouda, and parmesan. In a June 2011 exchange of
letters, South Korean officials clarified that GI provisions in KOREU would not restrict U.S.
products.36

32 USDA FAS, Tree Nuts Market Brief Update 2016, GAIN Report KS1625, October 6, 2016.
33 USDA FAS, Republic of Korea Dairy and Products Annual, GAIN Report KS1732, October 27, 2017.
34 The text of KOREU is available here: http://eur-lex.europa.eu/legal-content/en/TXT/PDF/?uri=
CELEX:22011A0514%2801%29&rid=1.
35 Geographical indications (GIs) are place names used to identify products that come from these places and to protect
the quality and reputation of a distinctive product originating in a certain region. The term is most often applied to
wines, spirits, and agricultural products. For more information, see CRS Report R44556, Geographical Indications
(GIs) in U.S. Food and Agricultural Trade.
36 CRS Report RL34330, The U.S.-South Korea Free Trade Agreement (KORUS FTA): Provisions and
Implementation.
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Overview of U.S.-South Korea Agricultural Trade

2018 Update of KORUS
In January 2018, at the request of the Trump Administration, the United States and South Korea
began negotiating potential amendments to KORUS. The Trump Administration called for the
talks in July 2017 due to concerns over the United States’ overall trade deficit with South Korea,
though it stopped short of requesting a full renegotiation.37 In March 2018, the U.S. Trade
Representative (USTR) and South Korea announced an agreement in principle.38 The proposed
KORUS modifications consist primarily of South Korean regulatory changes. The U.S. tariff
modifications are unlikely to require action by Congress for implementation because the original
KORUS implementing legislation gives the President authority to modify the U.S. tariff schedule
as needed in line with the agreement.39
The proposed KORUS update40 would not make any changes to agricultural provisions—South
Korea specifically asked that agricultural products be excluded from the talks. However, U.S.
farm exports will likely benefit from a commitment by South Korea to address issues with its
import verification process. Specifically, U.S. exporters have raised concerns that South Korean
customs officials have been requiring extra documentation for U.S. agricultural and other
products to prove they are of U.S. origin before applying the KORUS tariff rates. Some U.S.
dairy exporters have had product shipments that were verified as U.S.-made by the USDA
rejected by South Korean customs officials. U.S. dairy exporters have also complained of rejected
paperwork. They claim the extra requirements have been applied inconsistently and have in some
cases resulted in delayed shipments and the application of non-KORUS tariffs.41 In the agreement
in principle, South Korea has reportedly indicated it will address the concerns with its import
verification process and form a working group with the United States to monitor and address
future issues as they arise.42
Issues in U.S.-South Korea Agricultural Trade
Although KORUS removed, or set the phaseout for, many tariff barriers, several nontariff barriers
remain that obstruct U.S. exports of certain agricultural products to South Korea. Some of these
trade barriers, and other potential regulatory actions by South Korea that could affect imports of
U.S. agricultural products, are being discussed in the KORUS standing SPS committee.
New Crop Approvals and Acceptance
One such nontariff barrier is that South Korea has been slow to grant regulatory approval to crops
created through modern genetic engineering (GE) technologies.43 South Korea does not cultivate

37 USTR, “USTR Calls a Special Session Under the U.S.-Korea Free Trade Agreement,” press release, July 2017,
https://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/july/ustr-calls-special-session-under-usv.
38 USTR, New U.S. Trade Policy and National Security Outcomes with the Republic of Korea, fact sheet, March 2018.
39 For more information, see CRS In Focus IF10733, U.S.-South Korea FTA (KORUS).
40 Although an agreement on an update to KORUS was reached in March 2018, the text of the deal has yet to be
released and signed. Once signed by both the United States and South Korea, the updates to the FTA will also need to
be approved by the South Korean National Assembly.
41 Letter from Jim Mulhern, president and CEO, National Milk Producers Federation, and Matt McKnight, chief
operating officer, U.S. Dairy Export Council, to Robert Lighthizer, U.S. Trade Representative, March 29, 2018.
42 USTR, New U.S. Trade Policy and National Security Outcomes with the Republic of Korea, fact sheet, March 2018.
43 USTR, 2018 National Trade Estimate Report on Foreign Trade Barriers, March 30, 2018.
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any GE crops, and its regulatory system for the approval of products for import requires clearance
from up to five different agencies.44 USTR has criticized the review process as being onerous,
redundant, and, on occasion, lacking in scientific justification.45 Under pressure from the United
States and industry, South Korea has launched a pilot project to test a streamlined approach to GE
crop approvals.
South Korea largely imports GE crops for animal feed, though a lesser volume goes to food
processing. According to USDA, of the roughly 4.2 MMT of U.S. corn exports to South Korea in
2016, about 3.6 MMT were used as feed and about 0.6 MMT went to food uses.46 The U.S. corn
used for feed was nearly all genetically engineered, as was about 90% of the corn for food uses—
including high fructose corn syrup, corn oil, and other processed ingredients.
South Korea has in the past banned the import of U.S. crops over concerns of unapproved GE
strains. For example, imports of U.S. wheat were temporarily halted in the summer of 2006 after
unapproved GE wheat was found to be comingled in a field in Washington State. South Korea
now tests all U.S. wheat and wheat flour shipments for the presence of unapproved GE strains. It
also requires testing of some U.S. rice and corn shipments.
South Korean consumers have expressed concerns about GE crops, which has hindered
acceptance of the technology by the government and food makers. Since February 2017, South
Korea has required labeling of GE food ingredients, though only for products where the GE
protein is present. Korea’s threshold level for adventitious presence of GE material in agricultural
products is 3%.47 High fructose corn syrup and oils do not require labeling, as the GE proteins are
eliminated in processing. Still, South Korean companies have not fully embraced those
ingredients due to consumer concerns.
Fruit Market Access
USTR is working with South Korean officials to gain better access for U.S. apples, pears,
cherries, and blueberries.48 South Korea currently bans all imports of fresh U.S. apples and pears
due to pest concerns.49 U.S. officials are in the process of developing risk management practices
and quarantine requirements for growers looking to export to South Korea. The plan will need
approval by South Korea before exports can begin. Apples are the second-most consumed fruit in
South Korea after citrus, and currently all apples sold in South Korea are grown domestically.
South Korea is also a large producer of pears.50

44 Once a GE crop is petitioned for approval by the South Korean government, the Rural Development Administration
(RDA) conducts an environmental risk assessment. That process includes consultations by RDA with three different
agencies: the National Institute of Ecology (NIE), the National Fisheries Research & Development Institute (NFRDI),
and the Korea Center for Disease Control and Prevention. Meanwhile, the Ministry of Food & Drug Safety (MFDS)
conducts a safety assessment for food grain varieties developed with biotechnology. The MFDS review process
includes consultations with RDA, NIE and NFRDI.
45 USDA FAS, Republic of Korea Agricultural Biotechnology Annual, GAIN Report KS1739, November 16, 2017.
46 Ibid.
47 USDA FAS, Korea’s New Biotech Labeling Requirements, GAIN Report KS1711, March 28, 2017.
48 USTR, 2018 National Trade Estimate Report.
49 For details on South Korea’s import risk analysis process, see http://www.qia.go.kr/english/html/Plant/Plant_017-
22.jsp.
50 USDA FAS, Losing Juice: This Year’s Expected Pear Production Increase is an Exception to Longer Term Trend,
GAIN Report KS1736, November 1, 2017.
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Overview of U.S.-South Korea Agricultural Trade

USTR and USDA are working with the South Korean government to approve imports of fresh
blueberries from states other than Oregon. In 2011, South Korea approved Oregon blueberries for
import after growers there agreed to pest management and crop production requirements.51 Other
blueberry-producing states—specifically California and Washington—are now also seeking
market access, stating that their pest mitigation measures are as effective as those in Oregon.
Similarly, the U.S. cherry industry is pushing South Korea to allow imports of cherries from
Pacific Northwest states. Currently only cherries grown in California are available for export to
South Korea due to concerns over the spread of the coddling moth. Although South Korean
officials have approved of California’s pest mitigation measures, they argue that measures in
Oregon, Washington, and Idaho are not sufficient.
Potato Access
Currently only potatoes grown in the Pacific Northwest can be exported to South Korea. Due to
pest concerns, growers in California, Colorado, North Dakota, and other states do not have
access.52
Although tariffs on potatoes were immediately eliminated when KORUS took effect, South Korea
had formally closed its market to U.S. potatoes in 2012 after zebra chip virus was found in the
Pacific Northwest crop.53 The U.S. and South Korea reached an agreement allowing exports from
the region to resume in 2018 after growers and processors put in place mitigation measures to
prevent the spread of the virus. However, the agreement did not include access for growers in
other parts of the United States.
Efforts to expand access for potato exports from other U.S. regions have been hampered by South
Korean concerns related to potato spindle tuber viroid disease.54 Although that disease is not
present in commercial potato producing areas, and farmers have put in place mitigation measures,
South Korean officials have cited the disease in their reluctance to grant access to additional
states.
Changing Maximum Residue Limit Requirements
The South Korean government is putting in place a system that would require the preapproval of
maximum residue levels (MRLs) for veterinary drugs on meat and agrichemicals on plants before
products containing their residues can enter the country.55 South Korea expects to make a list of
approved plant products final at the end of 2018 and complete the list of approved products for
meat, poultry, and other animal products by December 2020. USTR has raised concerns over the
transparency of South Korea’s process in setting its MRLs, and the potential for an unwarranted
increase in testing, potentially delaying shipments. USTR has asked for the final implementation

51 Among other requirements, Oregon growers looking to export to South Korea must register their fields and subject
them to regular state inspection during growing periods. Once harvested, that fruit must be segregated from
nonregistered fields, and identifying information for the grower and packer must be included on packaging labels. The
blueberries must then be shipped by air in individually wrapped and sealed packages. For more information, see the
2018 Oregon Blueberry Korea Export Program at http://www.oregonblueberry.com/korea/.
52 USTR, 2018 National Trade Estimate Report.
53 Zebra chip causes striping and discoloration in potato chips produced from infected tubers, and also reduces yield.
54 This disease affects the growth of infected plants, causing them to develop more slowly, or stop growing entirely.
55 USTR, 2018 National Trade Estimate Report.
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Overview of U.S.-South Korea Agricultural Trade

to be delayed to allow U.S. companies and producers time to review the plan and to ensure that
MRLs are set at levels supported by scientific data.56
Access for U.S. Rice
South Korea has tight import restrictions on rice to protect its farmers, claiming that strong
domestic production of the staple crop is necessary for national food security. To that end, rice
was not included in KORUS, to the “great disappointment” of U.S. growers.57 South Koreans
consume about 3.1 MMT of rice annually.58
Between January 1, 2005, and December 31, 2014, South Korea increased its annual rice import
limit from 225,575 MT to 408,700 MT as part of a 1995 WTO agreement, which included
country-specific rice import quotas for the United States, Australia, China, and Thailand. As of
January 1, 2015, South Korea implemented an over-quota tariff of 513% for all international rice
imports above 408,700 MT and has eliminated country-specific allocations. U.S. rice exports
amounted to 152,000 MT in 2017, accounting for 37% of the total quota. However, USA Rice,
which represents U.S. rice growers, wants to return to a system that provides for a U.S.-specific
quota.59 In 2017, U.S. rice exports to South Korea amounted to approximately 1.5% of the total
U.S. rice crop.60
Carcinogenicity Labeling for Alcoholic Beverages
South Korea is the sixth-largest export market for U.S. wines, and the fifth-leading export market
for U.S. beer, accounting for about $22 million and $28 million in exports, respectively, in 2017.
South Korea requires that all beer, wine, and other alcoholic beverages available for sale include
the statement “alcohol is a carcinogen” on the label—the first county in the world to have such a
stringent health labeling requirement for alcoholic beverages.61 However, USTR has raised
concerns with how the rules were put in place, arguing that the United States and other countries
were not given enough time to review and comment on a proposal sent to the WTO in 2016
before the final measure was enacted. Producers were given six months to comply with the
labeling requirements. USTR has requested consultations over the labeling rules, and that South
Korea provide a scientific basis for the carcinogenicity claims.62
Competition from South Korea’s Other FTAs
Since 2004, South Korea has entered into 15 FTAs that provide preferential market access to 52
countries. In addition to the United States, South Korea has FTAs with Chile, Singapore, India,
Peru, Turkey, Australia, Canada, China, New Zealand, Vietnam, the EU, and Colombia. South
Korea also has FTAs with the European Free Trade Area and the Association of Southeast Asian
Nations. Seven of South Korea’s FTAs have been signed since KORUS was enacted in March

56 USTR, 2018 National Trade Estimate Report.
57 USA Rice, “USA Rice Sees KORUS Modernization Talks as Opportunity,” press release, January 26, 2018.
58 USDA, The Rice Market in South Korea, RCS-161-01, September 2016.
59 USA Rice, “USA Rice Sees KORUS Modernization Talks as Opportunity,” press release, January 26, 2018.
60 USDA, Rice Outlook, RCS-18A, January 17, 2018.
61 The labeling requirement also applies to liquor, however those products are not considered to be agricultural products
by USDA.
62 USTR, 2018 National Trade Estimate Report.
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Overview of U.S.-South Korea Agricultural Trade

2012. Further, South Korea is in negotiations over new FTAs with several countries, including a
multilateral deal with China and Japan.63
South Korea’s expanding free trade network could create future challenges for U.S. farmers and
ranchers looking to maintain their share of the South Korean market. For instance, although the
United States currently has a market access advantage in many products, it is losing its tariff
advantage to other South Korean FTA partners, some of which have lower transportation costs,
among other advantages. For example, U.S. beef producers can currently export 306,000 MT of
beef to South Korea with a 21.3% tariff—anything over that amount is subject to a 30% tariff,
though currently exports do not exceed the safe guard level. Australian producers can export
167,327 MT of beef, or just more than half the U.S. limit, to South Korea at 26.6% tariff rate,
with anything exceeding that amount subject to a 40% tariff. Tariffs and safeguards on U.S. beef
imports are to be eliminated in 2027 and Australia’s are to do the same in 2029.
Congressional Interest
South Korea is a key export market for U.S. agricultural products, and continued access to this
market is important for U.S. farmers and ranchers. The importance of South Korea as an export
market for U.S. agricultural products is magnified by the uncertainty that currently prevails in
three leading U.S. farm export markets—China, Canada, and Mexico—due to tariff-related
actions and ongoing trade negotiations over NAFTA. With the reduction and elimination of
import tariffs under KORUS and the rebound of the South Korean economy, South Korea has
potential to be a growth market for U.S. agricultural products. The successful conclusion of the
KORUS update talks also suggests potential stability in U.S. trade ties with South Korea at a time
when there is some uncertainty in other U.S. trading relationships. As U.S. farmers and ranchers
look to expand exports, Members of Congress may be interested in engaging with the
Administration through their oversight activities regarding the U.S.-South Korea relationship and
its effect on facilitating market opportunities for U.S. food and agricultural interests.

Author Contact Information

(name redacted)

Analyst in Agricultural Policy
/redacted/@crs.loc.gov , 7-....

63 For a full list of South Korea’s FTAs and on ongoing negotiations, see http://www.customs.go.kr/kcshome/main/
content/ContentView.do?contentId=CONTENT_ID_000002320&layoutMenuNo=23225.
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