This information is provided to allow the reader to have ready access to trade data in a form that facilitates consideration of export gains for California agriculture. The bottom line is that the KORUS FTA would make U.S. products relatively cheaper in Korea and, as a result, the Korean market for U.S. products would expand. Further, the larger difference in tariffs on agricultural goods means that there is substantial potential for gains from the KORUS FTA in agricultural trade for the United States and California.The United States and South Korea formally announced their intention to start negotiations leading to a free trade agreement on February 2, 2006. After negotiation sessions in Washington, D.C., and Seoul, follow-up meetings were held in Seattle, Washington, and on Jeju Island in South Korea in late October 2006. The negotiations were very strenuous given the complexity of trade relations between the two countries coupled with the short deadline to conclude the negotiations . In the United States, negotiations were authorized under trade promotion authority legislation. The most recent trade promotion negotiation authority was granted to the president under the Bipartisan Trade Promotion Act of 2002 and expired on July 1, 2007 . The TPA requires a 90-day presidential notification to Congress of intent to sign the agreement. The KORUS FTA was finalized on the last possible day, April 1, 2007, and on June 30, 2007, trade officials representing the United States and South Korea signed it. Once an agreement is signed, the U.S. Congress must pass implementing legislation before the trade agreement can take effect. There is no binding deadline for such legislation and implementation of FTAs has often been delayed until long after the agreements were signed. Under the TPA legislation, Congress must either pass or reject an agreement as signed and may not amend it. Trade observers consider this provision a requirement for any trade negotiation to proceed.
Clearly,vertical farming tower for sale trading partners would find it futile to negotiate with the United States if the agreement reached could subsequently be unilaterally changed by Congress. Besides the World Trade Organization negotiations in the Doha Round, the United States has used TPA to engage in free trade initiatives in the western hemisphere, East Asia, Oceania, the Middle East, North Africa, and southern Africa. The United States has completed free trade agreements with Canada, Mexico, Singapore, Central America-5 , Israel, Australia, Chile, Jordan, and Morocco and has signed an FTA with the Dominican Republic, Peru, Oman, and Bahrain .2 Under a simple definition, an FTA is a pact between or among two or more countries under which tariffs and similar non-tariff border restrictions are eliminated among the parties to the agreement. Many, if not all, FTAs achieve less than full free trade. Even when barriers are removed, the gradual scheduling of liberalization and other rules make the agreements complex . Korea has FTAs with Chile , Singapore , ASEAN-10 , and EFTA-4 . Korea has negotiations under consideration with Japan, Canada, Mexico, and India .3 Korea is also considering FTAs with New Zealand and Australia . Korea’s existing FTAs allow only limited access for agricultural trade. For example, the Korean FTA with the ASEAN-10, signed in May 2006, excluded a number of agricultural items, including rice . Previous Korean FTAs also contained provisions intended for gradual market opening, such as schedules for phasing out tariffs and non-tariff barriers. Furthermore, those FTAs granted a preferential status to the Kaesong Industrial Complex, which houses South Korean companies near the North Korean city of Kaesong. Likewise, previous FTAs signed by the United States have included tariff reduction schedules and provisions for dispute resolution and related issues. Even though the United States and Korea have been political allies for many decades, they have a history of trade disputes that goes back long before the WTO entered into force in January 1995.
Since 1995, the two countries have fi led thirteen cases involving bilateral trade problems, seven by the United States and six by Korea. Six of the seven U.S. cases against Korea have involved problems with non-tariff protection in agriculture .South Korea has experienced phenomenal change in the last half century. It has gone from an extremely poor agrarian economy using nineteenth century technology at best to a wealthy modern society at the cutting edge of applied science and with some of the world’s most advanced technological firms dominating the economic landscape. In two generations, Korea went through changes that took 100 years or more in the United States and Europe. As GDP doubled and then doubled again and again, annual income went from only a few hundred dollars per capita to more than $20,000 per capita today. Meanwhile, manufacturing and services expanded and the share of agriculture in the economy declined from about 30% in 1970 to a little more than 3% now. The changes in dietary patterns in Korea were equally rapid. As recently as 1982, about 32% of monthly food expenditures went to cereal consumed at home. By 2005, that share had fallen to just 6%. Consumption of all other products at home, except processed products, has also fallen somewhat while food consumed away from home has jumped from just 6% of monthly expenditures to about 46% . The huge shift in expenditures on food away from home also indicates the nature of Korean society, in which most people live in urban apartments. They spend long hours away from home involved in school, work, commuting, and other activities. Of course, many of the food expenditures away from home are for food preparation and related services that are not included in food costs for home consumption. The same issues are reflected in data for the United States, where expenditures away from home have risen rapidly in recent decades. The rapid change in the Korean diet may also be gleaned from changes in nutrient consumption. In 1980, fully 75% of Korean calorie intake came from carbohydrates while 12% came from protein and 13% came from fat. By 2004, carbohydrate intake had fallen to 61% of calories and fat had risen to 26% .
The increased fat intake has been driven by increased consumption of meat and dairy products and the greater role of processed snacks and other processed foods in the diet. It also reflects the different composition of food consumed away from home. In the context of this economic and social revolution, agriculture has changed but not to the degree that industrial and service economies have. Under tight protection from imports,hydroponic vertical farm rice continued and even expanded as the dominant crop with 37% of acreage devoted to rice in 1970 and about 50% currently. Horticultural production has expanded substantially while barley and potato acreages have declined. The arable land devoted to fruit production has expanded from about 2% in 1970 to 8% today and greenhouse production grew from almost nothing to 2% of arable land . The dairy and beef industries have expanded to meet part of the increased domestic demand. Farm size has grown slowly in Korea but remains far below the average farm size of other industrial economies other than Japan. Korean agriculture has been like Japanese agriculture in another characteristic as well: protection from imports has kept much of agriculture insulated from competitive pressures from abroad, helped maintain rice as the dominant crop, and relied on high prices rather than farm size increases as the mechanism by which to maintain farm incomes relative to non-farm incomes. Per capita farm income in Korea grew along with the national average until the last decade. Since the early 1990s, per capita income of the farm population went from rough parity with the non-farm population to about 80% of non-farm incomes today . At the same time, a demographic transformation has occurred in the age pattern of the farm population . In 1970, more than 50% of the farm population was less than 20 years of age and only about 5% of the population was older than 65. In 2004, about 30% of the population was older than 65 and only about 15% was under 20 . This huge and rapid shift means that there are few young families with children left among farm families. There will be a huge turnover among farmers and, given the lack of successors available, farm consolidation is inevitable.Table 1.b reports the value of total merchandise trade for the two countries for the period 2000–2007. The United States incurred a significant trade deficit each year, while Korea has produced a trade surplus each year. The United States trades much more than Korea; in 2007, U.S. total trade was more than four times Korean trade in value. However, considering the relative size of the economy, it is important to note that trade has a more significant role in the Korean economy. In 2007, annual trade totaled about one quarter of U.S. GDP but about 80% for Korea. For the period 2000–2007, U.S. exports to Korea averaged close to $26 billion and about 3% of total U.S. exports go to Korea. U.S. merchandise exports to Korea declined sharply in 2001 but bounced back gradually, reaching the pre-slump level by 2005. During 2006/07, U.S. exports rose substantially, reaching $33 billion.
In the same year, Korea was the seventh largest export market for the United States. Major export items from the United States to Korea include semiconductor chips, manufacturing equipment, aircraft, and agricultural goods. Korea is equally important as a source for U.S. imports as it is the seventh largest import source. Consistent with the overall U.S. trade deficit, the United States incurs a deficit in bilateral trade with Korea. The trade deficit was $14 billion at the beginning of the century and has remained in the range of $12 to $14 billion in recent years. Even though U.S. exports to Korea grew substantially, U.S. imports from Korea also increased and the trade deficit has changed little. Almost all imports from Korea are manufactured goods. Unlike the United States, which has run a trade deficit overall for decades, Korea has run a trade surplus for many years. However, the trade surplus in general is not large—about 5% of the country’s exports—because Korea has to rely on foreign sources for much its raw materials. Over the time period considered, Korea expanded trade rapidly, doubling exports as well as imports. Consistent with the global importance of the U.S. economy, the United States represents a much larger proportion of Korean trade than Korea does of U.S. trade. In 2007 Korea represented, at most, 3% of U.S. trade as a buyer of U.S. goods and as a seller in the U.S. market. During that same year, the United States had about 9% of the Korean market and about 12% of total exports by Korea were destined for the United States. Korea’s trade has been dominated mostly by three countries: the United States, China, and Japan. in a similar magnitude for both imports and exports as the United States but the EU is excluded from the list of individual countries.Prior to 2000, Japan and the United States traded the position of top source of imports into Korea. However, since 2000, Japanese exports to Korea have surpassed U.S. exports and Japan has remained as the top source of Korean imports. With the emergence of China, the United States’ relative position in Korea declined further. As shown in Table 1.c, since 2004 China has replaced the United States as the second source of Korean imports after Japan. China also is the largest market for Korean goods, having replaced the United States in 2003. Major Korean exports to the United States include cellular phones, cars, semiconductor circuits, televisions, fl at panel screens, and construction vehicles .Agricultural goods are important export commodities in the United States. Table 1.d provides values of agricultural trade for the United States and Korea for recent years. In 2007, agricultural trade occupied about 9% of U.S. merchandise exports and 4% of merchandise imports . The U.S. agricultural sector consistently produces a trade surplus and contributes to reducing the trade deficit .