Fresh Plaza (Netherlands)
10 April 2007
US: Sunkist Growers pleased with success of US-Korea FTA negotiations
“The Free Trade Agreement (FTA) with Korea is the first FTA in years that actually offers a market of meaningful opportunity for the export of California and Arizona citrus,” said Mike Wootton, Sunkist senior vice president of corporate relations. “We are very pleased with the success of the recent negotiations. The proposed tariff reductions offer increased market access and greatly improve the Korean market for fresh citrus.”
Historically, Korea has been a high tariff, protectionist market - with a 50% duty on oranges, 30% on lemons and grapefruit, and 144% on Mandarins. Sunkist has long urged the United States government to undertake an FTA with Korea to reduce those exorbitant tariffs. And, after a marathon three-week 8th round of daily negotiations, an agreement was reached. Wootton was in Seoul, in constant consultations with U.S. negotiators, during the final two-week session as citrus issues were tabled.
Sunkist’s representation of the U.S. fresh citrus industry in Seoul and the mobilization of key Republican Members of Congress from California - especially Reps. Devin Nunes, Elton Gallegly, Ken Calvert, Kevin McCarthy and David Dreier and the California Farm Bureau Federation, proved essential.
“The citrus industry owes a debt of gratitude to all those involved for their steadfast efforts in communicating to the White House and the U.S. Trade Representative just how critical tariff reduction and market access improvements for California and Arizona oranges and other citrus is to this FTA,” said Wootton.
“Had these Members and the California Farm Bureau not acted on our behalf in the final stages of the negotiations, our interests would not have been secured when critical decisions were made by the White House.”
Until the last few days of the negotiations, Korea was adamant about maintaining its tariffs on all citrus, particularly on oranges. In fact, the final decision on oranges was made at the cabinet level. “Although it was a real battle to keep fresh citrus on the table, we did secure some terms that will improve our market opportunities in the future,” said Wootton. Among the agreed upon provisions that will go into effect upon implementation of the agreement:
Seven-year phase out of the current 50% duty on U.S. oranges imported into Korea between March 1 and August 31, with immediate 20% reduction of the
50 % tariff in the first year of implementation to 30 % ad valorum, followed by a 5% reduction each year thereafter to zero duty in year seven.
Korea will continue to maintain permanently its 50% tariff on orange imports from the U.S. for the period September 1 to March 1(subject to any WTO mandated reduction ), but agreed during that protected period to a duty free tariff rate quota (TRQ) starting at 2,500 metric tons and increasing annually by 3% in perpetuity.
This increasing quota will, in time, supersede the protective tariff and eventually result in a year-round duty free market for fresh oranges.
The current 30% tariff on U.S. Lemons will be phased out over two years.
The current 30% duty on U.S. Grapefruit will be phased out over five years.
The current 144% over quota duty on U.S. origin Mandarins will be phased out over 15 years with incremental reductions of 9.6% per year.
“It is not, however, over yet,” said Wootton. “Market access issues affecting major commodities like beef and autos remain undetermined, and if these issues are not favorably resolved in the next couple months, it could result in Congress rejecting the agreement.” Similarly, the Korean National Assembly must ratify the agreement with a vote unlikely until after the Korean Presidential election in December 2007.
Claire H. Smith
Phone: +1 818.379.7455