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Agriculture Secretary Tom Vilsack Highlights Benefits of the U.S.-Korea Trade Agreement for U.S. Agriculture

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MODERATOR: Hello, everyone, and thank you for joining us for today's media briefing. Agriculture Secretary Tom Vilsack is on the line, and he is going to be discussing benefits of the U.S.-Korea Trade Agreement for U.S. Agriculture. If you want to ask a question of the Secretary, let us know by pressing Star/1 on your touchtone pad. Again, to ask a question, press Star/1 on your touchtone keypad on your phone, and now I turn it over to Secretary Vilsack.

SECRETARY VILSACK: Susan, thank you, and thank you all for joining. In just the next several weeks, the United States Congress will begin looking very closely at the U.S.-Korean Trade Agreement, which at USDA we believe it represents an historic opportunity to increase exports, to create jobs, and to bolster the American economy, as well as strengthening a very important and vital strategic alliance in the Asian-Pacific area.

The U.S. International Trade Commission estimates that the economic input to America will grow more from the U.S.-Korean Free Trade Agreement than from our last nine Trade Agreements combined.

In South Korea in November, the President walked away from a deal because it wasn't good enough for America's workers or businesses. He landed a better deal and signed a stronger agreement with South Korea in December that will help to reach our export goals of doubling American exports over the next five years and supporting at least 70,000 new American jobs, and we are hopeful that Congress will ratify and implement this agreement without delay.

The President was very clear about his commitment to completing the Trade Agreements in his State of the Union Address, and he was clear in directing Ambassador Kirk to intensify engagements on Panama and Colombia as well. That's why we're working to resolve the outstanding issues with reference to the Colombian and Panama agreement.

But right now we have before us the U.S.-Korean Trade Agreement that has historic bipartisan support from Democrats and Republicans, as well as from business and labor, from the Chamber of Commerce to the UAW, and it's time to move forward.

I'd note that the EU recently passed its own agreement with Korea that goes into effect July 1. My hope for the farm economy and I believe the President's hope for the overall economy as well is that Congress moves now to ratify and implement this Trade Agreement as quickly as possible.

We provide today roughly 30 percent of Korea's total agricultural imports for a total of approximately $5 billion in ag trade. That makes Korea the fifth largest market for our farm products, but interestingly enough, the U.S. used to be Korea's biggest trading partner. Since 2003, we've fallen to fourth place, behind China, the EU, and Japan. In just over a decade, our share of Korea's import market for goods has fallen from 21 percent to just 9 percent.

That's why we believe a ratified U.S. Free Trade Agreement will expand agricultural exports by what we believe to be $1.8 billion. That will help support another 16,500 jobs here at home. The agreement will immediately eliminate duties on a majority of the U.S. farm products that are currently exported to Korea. That would include wheat, corn, soybeans for crushing, whey for feed use, hides and skins, cotton, cherries, pistachios, almonds, orange juice, grape juice, wine, and will also reduce duties on many other products over time, including the U.S. beef and pork industry.

With ratification of the U.S.-Korea Free Trade Agreement, Korea's 40-percent tariff on U.S. beef will be eliminated over the next 15 years. Now, I've said that it will create and support tens of thousands of jobs across the nation, and it will, but if we don't act quickly and decisively, it's possible that America's competitors will secure their own trade deals with Korea and that our competitors' product will achieve the advantage in the Korean market.

Right now we know that Korea is negotiating a trade agreement with Australia, a major competitor for us in the beef market area. If Australia completes its agreement with Korea before we do, the tariff cuts for Australian beef will take effect before those of U.S. beef, giving the Australians a price advantage for at least the next 15 years. That's why we believe it's important to act now.

A ratified U.S.-Korea Free Trade Agreement will reduce tariffs on our beef exports to zero over time, enabling American beef producers to build on the exponential growth of exports to Korea, which reached $518 million in 2010, a one-year increase of 140 percent in value.

Moreover, even though our exports to the region are growing, our share of the Asian-Pacific import market is falling, as Asian countries secure preferential trade agreements that exclude the United States. Across the region, there are 180 in force, 200 are awaiting implementation, and we know that 70 are under negotiation. That's why we've got to move forward as quickly as possible, so that we also generate additional momentum for ratification of other trade deals once completed, which would include Colombia and Panama.

The time to act to win the future for jobs, for our communities, for American competitiveness, and for American agriculture is now. Now, as I said, there are a number of farm products that are going to benefit from immediate duty-free access. By 2016, more than 90 percent of pork exports will also be duty-free. Right now the average tariff on our agricultural goods in Korea is considerably higher than the average U.S. tariff, comparing 53.9 percent, the Koreans' average tariff, to 8.9 percent, our average tariff.

Agriculture is responsible for 1 out of every 12 jobs in the U.S. and every billion dollars in farm exports supports roughly 8,400 jobs in the United States in agriculture and related industries. That's why it's so important that Congress act quickly to ratify this agreement, so we can get the benefits of it for American agriculture and the job growth opportunities at a time when we are looking to expand job opportunities.

With that, I'd be glad to take questions.

MODERATOR: All righty. Reporters, if you'd like to ask a question, let us know by pressing Star/1, and because we have a number of people on the line, can you please keep your questions to one question only and no follow-ups? And with that, we go straight to the phone lines with Sally Schuff with Feedstuffs. Sally?

QUESTIONER (Feedstuffs): Yes. Thank you, Mr. Secretary, for taking my question. My question is has the KORUS agreement actually been sent to Congress at this moment, and if so, what do you see as the prospect for the rapid ratification that you are hoping for?

SECRETARY VILSACK: The agreement itself hasn't been specifically submitted to Congress. They're in the process of finalizing the translation of the agreement from American to Korean and Korea to America. I know that U.S. Trade Representative Ron Kirk, Ambassador Kirk, will be testifying before the Senate Finance Committee at the end of this month about the Korean Free Trade Agreement and likely will have opportunities to talk about the specifics.

In terms of our hope and our belief, it is that it's in the best interest of America, it's in the best interest of American agriculture to get this agreement ratified as quickly as possible for two reasons. One, as I said earlier, it would allow for an immediate reduction of tariffs on 60 percent of the ag products that are currently being exported to Korea, making them far more competitive and far more likely to purchase American goods, thereby creating better bottom lines for American farmers and ranchers as well as additional job growth. And two, any delay gives competitors the opportunity to finalize their own agreements, which might make it more difficult for us to access and to preserve market share and expand market share. So our hope is that Congress responds quickly and favorably, and we think that there's a lot of bipartisan support for them to do so.

MODERATOR: We continue on the line. Our next caller is Matt Kaye with Berns Bureau. Matt?

QUESTIONER (Berns Bureau): Yes, thank you. Mr. Secretary, thank you for holding this press call today. In regards to the beef issue, I assume the administration has discussed in greater detail, since Chairman Baucus' hearing last year, his objections to the renegotiated agreement over beef. What is the prospect now of getting Chairman Baucus on board with the agreement? Obviously, he's got to have hearings on this. And the timing, talking about July 1st when the EU agreement goes into effect, obviously we want to have this in effect by July 1st when that deal becomes effective. Does the Korean legislature still have to ratify this, and will that allow for actual implementation by July 1st, even if we're done?

SECRETARY VILSACK: Our goal is to get to that July 1st deadline with an implemented arrangement and agreement, and our hope is that the Koreans share that goal as well. And as far as I know, they do.

As it relates to Chairman Baucus, obviously the Chairman has some serious questions that will no doubt be asked and answered during the course of hearings. I would simply point out that we want to make sure that there's a full understanding by the Chairman as well as Members of the Committee of the specific benefits that this agreement has for agriculture generally. As I pointed out, 60 percent of our ag products that are currently being exported to Korea will be duty-free immediately. The other 40 percent over a period of time, that includes beef, substantial reductions in the tariff over a period of years, making our beef far more competitive.

I think when the Chairman understands the competitive circumstance that we find ourselves in relative to Australia and the fact that we have moved a good deal in terms of getting markets opened in Korea and that there is a pathway over time to further expansion of the market, consistent with OIE standards and international rules and regulations and science-based decision-making, that perhaps he will be more comfortable with the agreement.

But at the end of the day, this is an agreement that's important for beef and pork producers in the country. It's absolutely important for agriculture generally. We had a record year in trade last year. We are poised to have an even better year this year, and it's one of the reasons why we're seeing very high incomes across the board for farmers and ranchers and growers in the country. We want to continue that momentum. We don't want to stall it.

MODERATOR: As we continue on the line, we have Jim Berger with Washington Trade Daily, followed by Jason Vance from Farm Progress. Jim?

QUESTIONER (Washington Trade Daily): Yeah, thank you. I just want to pick up on your last part of that comment about the pathway to further expansion of beef in Korea. Can you tell us specifically what activity there has been between Korea and the U.S. on opening that market to older beef beyond 30 months?

SECRETARY VILSACK: We've had conversations with the Koreans throughout this process and a recognition that there needs to be an understanding and appreciation that what we are advocating for is OIE compliance. That's been a very consistent message with the Koreans, with the Chinese, with Japanese, with everyone we talk to about this issue that there has to be a pathway and a process that is acceptable, that gets us ultimately to an open market.

We've seen, I think, a very strong interest in the part of Koreans in American beef recently. As I alluded to, we had significant sales last year, and we expect and anticipate a continued growth of interest in beef. And we honestly think that once we get this Korean Free Trade Agreement through the process that it gives us further opportunity to go back to the Chinese, the Japanese, to have further conversations and discussions about reopening those markets as well, so it's not just Korea.

It's an opportunity for us to be consistent with our position, that it's about OI compliance, it's about international and science-based rulemaking process, and it's about a pathway to opening up these markets not only to Korea but also China and Japan.

MODERATOR: Reporters, if you'd like to ask a question of Secretary Vilsack, please let us know by pressing Star/1 on your touchtone pad. Up next, Jason Vance with Farm Progress. Jason?

QUESTIONER (Farm Progress): I was wondering, earlier this year, Korea agreed to --

MODERATOR: Jason, it is very difficult for us to hear you.

QUESTIONER (Farm Progress): Is that better?

MODERATOR: Yes.

QUESTIONER (Farm Progress): Mr. Secretary, earlier this year, Korea agreed to allow U.S. pork into the country duty-free due to the large liquidation of their pork hurt due to the foot-and-mouth disease epidemic in that country. Could you talk to us a little bit about that agreement and that situation and what that means for U.S. producers?

SECRETARY VILSACK: We can provide specific information about the current status of pork exports, but I think it's important to emphasize that, generally speaking, under this agreement, what we're looking at is a phasing out of the tariffs over a period of time, up to 2016.

As you know, the pork industry agreed to an extension of that phase-out in order to get the other concessions that the President was able to secure in negotiations after walking away from the agreement earlier last year, and we certainly appreciate the fact that pork producers recognize that overall this is a good thing for American agriculture and their willingness to work.

On the foot-and-mouth disease, I would just simply say that we continue to work with our colleagues in Korea to try to provide them the technical assistance and information they may need to do as good a job of containing the situation as they can, and we'll continue to work with them to make sure that there's an adequate supply of pork.

MODERATOR: Up next on the line, Jerry Hagstrom with The Hagstrom Report. Jerry?

QUESTIONER (The Hagstrom Report): Good afternoon, Mr. Secretary. Two things. First of all, the Republicans on the Hill are saying send up all three agreements, Korea, Panama, and Colombia, all at once. What is your reaction to that?

And second, I know it's off topic, but I know that you met with a group of Senators on the Senate Ag Committee today and Lisa Jackson to talk about a working group on regulatory issues. Could you tell us how that meeting went?

SECRETARY VILSACK: Jerry, first of all, the last question first, it was a very constructive meeting, and I think it was an opportunity for us to begin the process of making sure that there is a meeting of the minds about precisely what EPA is proposing or not proposing, and I think that there is a real opportunity there for a lot of misunderstandings to be cleared up and certainly appreciate the Chair and the Ranking Member's willingness to give us that opportunity, and we are going to continue to work with them through the working group process. I think it's very constructive, a constructive mechanism.

As it relates to all three agreements at the same time, I mean, fundamentally, the Colombia and Panama agreement are still in the process of being finalized. We sent a team down to Colombia recently to continue negotiations. There's some issues that are yet to be resolved, and frankly, my view of this and I believe the President's view is that we need to get these agreements done as quickly as possible.

Why? Because there are benefits to our farmers and job creation opportunities that we need immediately. We don't have the luxury of waiting where the stars are aligned perfectly on all three agreements. Secondly, we've got competitors out there that absolutely want us to delay. They want us to have conditions and strings attached, so it delays the process, delays the implementation, so that they can take advantage of that delay to forge their own free trade agreement, to establish their own presence in the market, and be able to take market share, which will make it much more difficult for us to compete.

So our view is let's get Korea done. Korea's agreement has been completed. It's been negotiated. Let's get it passed. Let's then use that as a basis for encouraging finalization of the Colombia and Panama agreement and getting rapid ratification of those two agreements when they're ready.

MODERATOR: We continue on the line. Reporters, if you'd like to ask a question of Secretary Vilsack, please let us know by pressing Star/1 on your touchtone pad. Next is Jamie Strawbridge with Inside U.S. Trade. Jamie?

QUESTIONER (Inside U.S. Trade): Hi, Secretary. Just to return to the beef question once more on Korea, two things. I mean, can you let us know, has there been any engagements with the South Koreans since last December when the bilateral deal was struck on the beef issue? I mean, are they any more -- you're talking about a pathway there, but, I mean, are they open to having a pathway at all, or what's their view on that? And if we haven't had any more progress since last December, is it right to say the administration is just sending up Korea, you know, even though nothing more on beef has been gotten?

SECRETARY VILSACK: Well, let me just simply say that the last several months have been focused on making sure that the agreement that's been reached is understood and properly translated, and that may sound like a very bureaucratic and process-oriented response, but the reality is when you're translating an agreement into a foreign language, you've got to make sure that the agreement says what the parties agreed to and that it's not something different.

I would say that there will always be ongoing communication with the Koreans about beef. We obviously right now are anxious to promote as much trade within the framework of the agreement as possible, so that we increase the comfort level of Koreans and increase the comfort level of Korean consumers and get them to acquire, if you will, a very solid taste and desire for American beef. It's a quality product. We believe it's the best in the world, and as consumers are exposed to the best in the world, they are going to continue to want more of it, which will make it easier for us as we move forward.

We are constantly talking to our trading partners at all times about issues, so that we can move forward, but right now the focus is on let's get it translated properly, let's get it up to the Hill, let's get it ratified, let's make sure that the beef trade is as open as it can be under the agreement, and let's get the Korean consumer basically hooked on American beef.

MODERATOR: Our last call comes from Mark Drajem with Limburg [sic] News. Mark?

QUESTIONER (Bloomberg News): Thanks. Mr. Secretary, just following up on that, do you foresee any effort to come up with some greater access for beef before the agreement goes to the senate or to mollify Senator Baucus?

SECRETARY VILSACK: I think it's going to be a little bit difficult to do that under the circumstances. I think what we need to be doing is making sure that Chairman Baucus and other Members of the Committee are fully aware of the expanded opportunities that this represents for American agriculture in a variety of products, including beef and pork and including the commodities I listed earlier where the tariffs are going to be eliminated immediately.

When you're talking about one of our best trading customers, you're talking about substantially reducing tariffs on 60 percent of what we sell them, making it far more competitive than it's been, and you're talking about an additional $1.8 billion of additional trade opportunities and 16,000 jobs. These are benefits that can happen right away. These are benefits that we can see immediately.

It adds to the momentum that has been created over the last two years in terms of trade, and as we see record numbers, as we see the American brand being more widely accepted and promoted, whether it's through trade shows, whether it's through more presence at exhibits, whether it's a more aggressive effort with our cooperators, whether it's even in tough budget times trying to allocate more resource to trade promotion, all of that is taking place because the President is very focused on this. He understands, and he's right about this, that when you export, you export our goods and create wealth in the United States, it's a way in which you can expand the middle class in this country. It's a way in which you can put people back to work at good jobs. It's a way in which you can improve prosperity in Rural America by improving the bottom lines of ranchers and growers and farmers.

So the focus here has to be on quick ratification, so that we can start receiving the benefits of this, and as we do, we gain market share, we gain greater consumer acceptance and confidence, it's just going to lead to more opportunities. And it's also going to provide us significant impetus in terms of China and Japan, reopening markets in the beef area there, as well as the President's ongoing conversations in the Trans-Pacific Partnership opportunity, which is a multilateral opportunity for expanded trade.

We just can't let any grass grow. We've got to move, and we've got to move aggressively, and I think we're doing that. I think it will also provide momentum for finalizing, completing, and ultimately ratifying Colombia and Panama, which will also be beneficial to American agriculture.

MODERATOR: Reporters, we want to thank you for calling in for today's media briefing, everyone also that was on the line, and that concludes today's event.


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