Although failed negotiations on the Korea Free Trade Agreement are a major setback, the battle is not lost.
President Obama returned to the White House yesterday without a signed Korean agreement, but IL Corn still believes there is opportunity to finalize this important legislation. The agreement wasn’t set to be considered in the lame duck session; experts predict that we might see a Korea FTA by March 2011.
Timing couldn’t be better for agriculture. Korea is now the third largest market for U.S. agricultural exports, valued at $3.9 billion in 2009. According to the economic analysis by the American Farm Bureau Federation, the Korea FTA would expand those exports in a wide range of commodities and result in $1.8 billion in additional sales, or a 46 percent increase.
Pork stands to have the most to gain from an FTA with Korea. Dermot Hayes, Iowa State economist, predicts that the FTA will left live hog prices by a staggering $10 per animal when fully implemented and will generate an additional $825 million in U.S. pork exports. Beef could have substantial gains as well, but remains one of the major negotiating points within the agreement.
According to Tim Lenz, Illinois Corn Growers Association, corn markets can look for very positive gains upon a finalized agreement.
“A gain for U.S. beef is a gain for U.S. corn. Corn also stands to win from the favorable treatment of dried distillers grains with solubles. But the biggest win is perhaps the duty-free market for bulk corn into Korea and the preservation of the market,” Lenz said.
A signed FTA with Korea helps keep U.S. corn competitive.
When a Korea FTA is considered by Congress, it will have “Fast Track” status, meaning that Congress can only vote ay or nay and will not be allowed amendments on the bill. This increases the ease by which the FTA is passed considerably.
Since June 30, 2007, when the last Korea FTA was signed, the agreement has languished in the congressional approval process. The potential benefits this agreement might offer our nation in a time of economic instability are numerous, including the creation of 11,000 new jobs due to the increased pork exports alone and $10 to $12 billion additional money to the U.S. GDP.
Free Trade Agreements with Panama and Columbia are on the line as well, both offering tremendous market opportunity for agricultural exports.