Search Penny Hill Press

Friday, February 12, 2010

U.S.-South Korea Beef Dispute: Agreement and Status

Remy Jurenas
Specialist in Agricultural Policy

Mark E. Manyin
Specialist in Asian Affairs

South Korea's commercial significance for U.S. beef is reflected in the position taken by several Members of Congress, who have stated that congressional consideration of, and support for, the Korea-U.S. Free Trade Agreement (KORUS FTA) depends on South Korea fully opening its market to U.S. beef. In 2003, South Korea was the third-largest market for U.S. beef exports, prior to the ban its government imposed after the first U.S. cow infected with mad cow disease, or BSE (bovine spongiform encephalopathy), was discovered. 

On April 18, 2008, U.S. and South Korean negotiators reached agreement on the sanitary rules that Korea is to apply to beef imports from the United States. It allows for imports of all cuts of U.S. boneless and bone-in beef and other beef products from cattle, irrespective of age, as long as specified risk materials known to transmit mad cow disease are removed and other conditions are met. However, both sides revised this deal on June 21, 2008, to limit sales of U.S. beef to cattle less than 30 months old. Within a few days of the revised agreement, South Korea published rules to put this agreement into effect, and quickly began to inspect U.S. beef sitting in cold storage. The U.S. Department of Agriculture similarly began to implement a new program to verify that the beef sold is processed from cattle under 30 months old. 

While the U.S. beef industry and U.S. policymakers welcomed the initial April deal, Korean TV coverage of the issue and Internet-spread rumors that questioned the safety of U.S. beef resulted in escalating protests and calls for the beef agreement to be renegotiated or scrapped. U.S. officials countered that measures already in place to prevent the introduction of BSE in U.S. cattle herds meet international scientific standards. To address rising public pressure, the Korean government twice pursued talks with the United States to find ways to defuse these concerns without "renegotiating" the beef agreement. In late June 2008, both governments confirmed a "voluntary private sector" arrangement that allows Korean firms to import U.S. beef produced only from cattle less than 30 months old. Both governments view this as a transitional step until Korean consumer confidence in the safety of U.S. beef improves. 

U.S. beef exporters have since worked to recapture this key overseas market. Exports of U.S. beef (including bone-in cuts) to South Korea resumed in mid-July 2008, and by year-end reached almost $300 million, slightly more than one-third of the record 2003 sales level. For 2009, despite a drop-off in beef sales worldwide due to the economic recession, sales to Korea may still reach the 2008 level. Though Australia is the main competitor, U.S. beef exporters have gained noticeable market share since the Korean market reopened to U.S. beef. The U.S. share (in quantity terms) rose from 15% in 2008 to 27% in 2009. Future sales will depend on the price competitiveness of U.S. beef compared to Australian beef (largely influenced by changes in their respective exchange rates relative to the Korean won), and signs that Korean consumers are more willing to eat beef away from home as the country's economy begins to recover. 

The anti-beef agreement protests in South Korea have subsided. However, their size and intensity likely have eroded the Korean President's willingness and ability to accept the changes the Obama Administration has said would be necessary before it will consider submitting the KORUS FTA to Congress. Presidents Obama and Lee Myung-bak met in November 2009, and the two presidents agreed to "move the agreement forward." However, the prospect of congressional action on the KORUS FTA in 2010 appears slim. 

Date of Report: January 26, 2010
Number of Pages: 14
Order Number: RL34528
Price: $29.95

Document available electronically as a pdf file or in paper form.
To order, e-mail or call us at 301-253-0881.