Korean agreement reduces tree fruit tariffs
But it doesn't provide access for U.S. apples and pears.
U.S. sweet cherry exports will benefit immediately from reduced tariffs if the proposed free trade agreement with the Republic of Korea is approved. Tariffs for apples and pears will be reduced over a much longer time.
The U.S. Trade Representative concluded historic free trade agreement negotiations with Korea in April. As part of the proposal, tariffs on U.S. cherries imported into South Korea will drop from 24 percent to zero, with the 45 percent tariff on U.S. apples and pears eventually reduced to zero over ten years for all varieties except Fuji apples and Asian pears. Tariffs on Fujis and Asian pears, trade-sensitive commodities within South Korea, will take 20 years to reach zero.
Korea has been one of the most protected agricultural markets in the world, according to the U.S. Trade Representative office. The agreement is the most commercially significant free trade agreement in more than a decade.
"All of our tariffs will eventually go to zero," said Mark Powers, vice president of the Northwest Horticultural Council, which is based in Yakima, Washington.
"It's just a matter of how quickly that happens. The trade agreement is great for cherries, and not bad for apples and pears," he added. "This is an opportunity to get rid of tariff barriers."
Powers participated in free trade agreement meetings in Seoul, Korea, in March, advising trade negotiators on agricultural issues pertaining to tree fruit. The agreement negotiations are an important step.
"But now the political process must take place in approving the agreement," Powers said.
Phytosanitary issues relating to U.S. apples and pears—fruits that do not have access—were not part of the discussions, he emphasized. The exclusion of apples and pears from Korea has long been a thorn in the side of industry representatives.
Several pests and diseases, including codling moth and fireblight, that were identified in a previous pest risk analysis, stand in the way of access for U.S. pear and apple growers.
"Clearly, much more must be done before we are able to export apples and pears to Korea," Powers said.
Approval of the proposed trade agreement is a complex process, Powers noted. At press time for Good Fruit Grower, the Hort Council's Foreign Trade Committee was scheduled to review the tree fruit portion of the agreement. Technical trade advisory groups, including one representing fruits and vegetables, must submit their reviews of the agreement to several branches of government, Congress, and the Bush administration by late April. The agreement must be approved by Congress and signed by the president before it becomes binding. The Korean government must also approve the agreement.
Insiders believe that it is unlikely the trade agreement will become effective before 2009, Powers said.
Growing cherry market
The reduced tariffs come at a good time for U.S. cherry producers who are now targeting the South Korean market. Last year, a promotional program was launched in South Korea for the first time, according to Keith Hu, international marketing director for Northwest Cherry Growers. A strong program is planned for the 2007 season.
South Korea has been a growing market for Northwest cherries in recent years, even without a promotion program in place and despite a 24-percent tariff and fumigation requirements, he reported. Cherry exports there grew from 28,700 cases in 2003 to 91,000 boxes (20-pound equivalent) in 2006, an increase of more than 215 percent.
The 24-percent tariff has represented an additional cost of about 75 to 90 cents per pound for U.S. cherries sold in Korea, reported the Hort Council.
Unlike Japan, Korea does not grow any cherries that compete with U.S. cherries.
Apples and pears
Although the proposed tariff reduction is not as good for U.S. apple and pear producers as for cherry growers, Powers pointed out that if access is finally achieved, the tariff will be lower than it is now. He noted that currently no country has access for apples and pears into Korea, not even Chile, which has a free trade agreement with the country.
Korea has a strong Asian pear industry, exporting between 5,000 and 9,000 metric tons annually to the United States, Powers said. "For the Korean pears already coming in, the proposed agreement doesn't really change that impact. They already come in on a tariff that is less than a cent per kilogram. However, that will go to zero under the new agreement."
He added that the Korean apple industry has been shrinking in recent years, with annual production now around 18 million cartons. "On the import side for apples, there's not a threat to us from Korea because they don't ship apples here." He noted that they tried several years ago, but fruit had to be fumigated and undergo cold treatment. "Once here, the fruit faced strong competition from our apples."