Where’s the beef in the Korean Free Trade Agreement?

“Beef – It’s what’s for dinner” is the tagline of a long-running ad campaign by the beef industry to encourage more domestic consumption. Beef is also the main course of a new trade pact between the U.S. and Korea and the politics behind this dispute are as juicy as some top tenderloin. As a candidate in 2008, President Obama was specific about opening up foreign markets for American farm products and specifically getting more U.S. beef into Asian nations. In the Obama Rural Plan, the then-Illinois senator said he would “work to break down trade and investment barriers to maintain the American farmer’s competitiveness around the world. Obama has supported bipartisan efforts to lift Korea and Japan’s ban on U.S. beef. These trade restrictions limit U.S. beef’s access to these lucrative markets and are based on principles inconsistent with internationally recognized science-based standards.” Under the Bush administration, a free trade agreement between the U.S. and South Korea was signed in June 2007 but ratification stalled over American demands that Korea take steps to increase U.S. auto imports and ease restrictions on American beef. Last December, both sides agreed to revisions on the elimination of auto tariffs but the beef issue remains unresolved. Beef exports are a big deal to Max Baucus, chair of the Senate Finance Committee which has jurisdiction over trade issues. Montana is the sixth-largest beef producer in the nation and Baucus has taken a hard line on behalf of his Big Sky ranchers and farmers. Last month, Baucus was quoted in the Washington Post as saying “I don’t support Korea (FTA) until Korea opens up its market.” The main rub is the fear that South Korea has that our beef is unsafe despite the fact that there have been no cases of BSE (mad cow disease) in the American cattle herd since 2003. Still, since 2008, Korea only will allow imports of beef from U.S. cattle that are less than 30 months old. Baucus and other Finance Committee senators from big beef states (Iowa, Kansas, Oklahoma and South Dakota) maintain that Korea’s age restrictions are inconsistent with scientific guidelines and therefore are essentially unwarranted bans on U.S. beef products. Right now, Australia has the largest share in supplying beef to 49 million hungry Koreans with some 70 percent of the market with the U.S. share at about 30 percent. The stakes are high because over the last 15 years, the U.S. cattle herd has shrunk to the lowest levels since the 1950s. At the same time, a new report by R-CALF (Ranchers-Cattlemen Action Legal Fund), found that over the past 22 years, the 17 countries with which the U.S. has free trade agreements (FTAs) has resulted in the U.S. realizing a cumulative trade deficit of $41 billion. Using U.S. Department of Agriculture data, R-CALF found that in 1985, 10 percent of all available beef in the U.S. market was imported and as of 2010 that number has increased to 14 percent. At a March 9 Finance Committee hearing, Baucus grilled U.S. Trade Representative Ron Kirk on the beef impasse. Baucus reminded Kirk of President Obama’s December 2010 pledge to gain “full access for U.S. beef to the Korean market,” and stated “as you know there’s been no progress.” Baucus told Kirk “I’m asking for a path to free access, that’s not asking for much. What steps are you taking to secure that (Obama) pledge?” When Kirk responded that “we’re going to continue to engage Korea,” Baucus upped the ante bluntly telling the ambassador “Korea’s not going to agree today so what makes you think they are going to agree tomorrow,” and adding that a beef export agreement was “virtually a necessary condition for us to move forward on this whole range of issues,” meaning all of the pending FTAs with Korea, Columbia and Panama and the Trans Pacific Partnership, a trade pact involving a number of nations on the Pacific rim. Re-capturing that pre-2003 market share is a vital piece of the puzzle for American agricultural exports which increased by 18 percent last year accounting for $119 billion in sales. But beef exports amounted to only 9 percent of that pie.