Today, U.S. Senator Maria Cantwell (D-WA) hailed an announcement by the U.S. Trade Representative (USTR) that the free trade agreement with South Korea will go into effect March 15th, ensuring burdensome tariffs on U.S. products will be eliminated in time for this year's growing season.
The trade agreement with South Korea will immediately eliminate tariffs on various agricultural products important to Washington's economy, including cherries, wine, potatoes, and wheat. The deal also eliminates a 40 percent tariff on beef over 15 years. South Korea is an important export market for Washington state. The country is the fourth largest export market for Washington state goods, taking in $1.4 billion worth of agriculture exports from the state last year.
The free trade agreement (FTA) with South Korea is on track to be the first of three trade agreements -- with South Korea, Panama and Colombia, enacted into law last October -- to go into effect. Cantwell consistently championed the passage of the FTAs through her role on the Senate Finance Committee. She helped secure passage in the Senate after the deals passed the House on three separate votes. The American Farm Bureau estimates that the increased market opportunities for Washington state under these trade agreements could increase direct exports by $52.8 million per year and add hundreds of jobs to the state economy.
"Today's news means we are less than one month away from crossing the finishing line and expanding our access to the South Korean market," said Cantwell. "We are pleased that the trade agreement with South Korea eliminates harmful tariffs in time for this year's growing season. In Washington state, that means a potential boost for cherry, wine, beef, potato, and wheat exports right away, and it ensures our producers can be more competitive in the state's fourth largest export market."
Under the agreement, South Korea will immediately eliminate a 24 percent tariff on sweet cherries, which was equivalent to $7.5 million last year. The reduction in tariffs would reduce the price of cherries by 75 to 90 cents per pound in South Korea, which the Northwest Cherry Growers anticipate could boost sales by $18 to $20 million per year over the next few years. The Korea FTA would also immediately eliminate a 15 percent tariff on wine. During fiscal year 2010, 24 percent of the wine exported from Washington went to South Korea.
The FTA with South Korea will also eliminate a 40 percent tariff on beef over 15 years. The American Farm Bureau estimates Washington state is expected to increase beef exports by $7 million per year. Beef production is the state's fifth largest commodity and the market for American beef in South Korea has the potential to reach $1 billion.
The free trade agreement immediately eliminates an 18 percent tariff on frozen potato products and over time a 30 percent tariff on fresh potato products. The FTA also will immediately eliminate a 1.8 percent tariff on wheat, which will make the United States more competitive in the Korean market with Australia and Canada. The fourth largest producer of wheat in the nation, Washington state exports 85 percent of its wheat crop each year. The American Farm Bureau Federation estimates Washington state is expected to increase wheat exports by $1.97 million per year to South Korea.
Washington's ports and waterways -- the closest to Asia and Alaska of all U.S. ports -- also stand to significantly benefit from the U.S.-Korea FTA. Washington state is the largest exporting state in the country per capita, and together, the Ports of Seattle and Tacoma comprise the third largest container load center in the country. In 2010, $704 million in state revenue was generated from port activities and 8,480 companies exported their goods from operations in Washington.
During the first two months following the implementation of the European Union-Korea Free Trade Agreement on July 1, 2011, the European Union's exports to South Korea grew by nearly 28 percent compared to the same period in 2010. The United States-South Korea FTA will help secure America's place in an important export market.