Groups such as tghe American Soybean Association (ASA), the National Corn Growers Association (NCGA) and the US Grains Council (USCG) have highlighted of the importance of the US Korea Free Trade Agreement (KORUS) and role it plays in feed grain trade following indications there would be new talks on the deal and that the White House was considering withdrawing from the agreement.
The ASA warned against the practice of walking trade agreements to the brink and demanded that the US stay in the deal.
Trade is a delicate process, said Patrick Delaney, policy communications director with ASA. “It’s something that is established through comprehensive dialogue and conciliation from both sides – the hammer approach works very rarely, if ever,” he added.
“At this point for ASA, the loss of the South Korean market is a serious concern – it’s the number two soybean oil market globally, and number 12 for whole beans, not to mention its impact in terms of poultry and pork exports, which drive meal demand in the form of animal feed,” he told FeedNavigator. “Larger than that, though, is the danger of the precedent that this kind of brinkmanship sets.”
Walking away from the trade partnership would be a “rash move,” said the USGC. “The Council strongly opposes withdrawal from the US Korea Free Trade Agreement (KORUS), an action that will lead to immediate and sustained losses in sales to our third largest corn customer,” it added.
South Korean market
The agreement started in 2012, although it was initially signed in 2007, said the Office of the US Trade Representative.
For US soybean producers, the Asian country offers a large direct and indirect market for soybean meal, said Delaney.
“What we lack in meal sales there in-country, we make up for domestically in the form of the meat protein that we export to Korea, primarily chicken,” he said.
The USGC also has been working to expand imports for feed ingredients in the South Korean market, the council said. The country was the third largest importer of US corn and dried distillers grains with solubles (DDGS) in the 2016/17 marketing year and it has more than doubled the amount of corn it purchased year-over-year.
The trade agreement provides duty-free access for several feed ingredients including corn, sorghum and DDGS, said the USGC. The majority of feed millers in South Korea also use DDGS to generate livestock and poultry rations.
Having the trade agreement in place also allows US producers to access more of the soybean market in that country, said Delaney.
“We only supply just less than half of the 1.3 million tons of soy imported into Korea,” he said. “The other half is provided by Brazil and Argentina.”
Other exporters likely would be able to claim market share, if the US ceded it, he said.
“If by withdrawing from KORUS we make it harder for American beans to enter the Korean market, our South American competition is all too happy to step in in our place,” he said. “This idea that we’re the only game in town is absolutely false and terribly short-sighted.”