South Korea is an important export market for U.S. agricultural products. In 2017, U.S. farmers and ranchers sold about $7 billion of goods to South Korea, making it the sixth-largest export market by value for U.S. agricultural products. Leading U.S. agricultural 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 and agricultural products with South Korea in 2017.
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.
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.
The value of U.S. agricultural exports to South Korea 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.
Although market access for U.S. agricultural exports to South Korea has generally increased under 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.