2012-3-13

US loosen application requirements for safeguards to protect its industries

The United States has loosened application requirements for safeguards to protect its industries ahead of the South Korea-US Free Trade Agreement (KORUS FTA), which takes effect on Mar. 15. But observers are saying South Korea has ineffective safeguards in place for agriculture, where negative impacts from the KORUS FTA are expected to be significant.

An examination of Article 3.3 on agricultural safeguard measures showed that beef and 29 other agricultural items have year-by-year standard quantities set, with additional duties only possible once these amounts have been exceeded. For example, without the standard being exceeded, it would not be possible to implement an emergency import restriction even in the event of a large drop in the prices of domestic products owing to agricultural imports.

The National Assembly previously stated in its examination report for the KORUS FTA ratification that the triggering standards were too high to be effective. More than 270 thousand tons of US beef would have to be imported this year before the safeguard triggering conditions would be met. The standard amounts increase each year by six thousand tons, meaning that in 15 years, emergency import restrictions could only be carried out after 354 thousand tons had been imported.

But only 128 thousand tons were imported last year, well short of the 270 thousand tons required to trigger a safeguard.

For pork, a safeguard is only applied for refrigerated, not frozen products, which accounts for the bulk of imports. The triggering standard is 8,250 tons for the first year of the KORUS FTA in 2011 and is set to increase by 6% each year to a final total of 13,398 tons.

The National Assembly report noted that refrigerated meat accounts for less than 5% of pork imports and said the safeguard triggering standard was unrealistic because imports are unlikely to increase over a short period due to problems with transport costs and maintaining freshness.

Also cited as a problem was the restriction of agricultural safeguard eligibility to just 4.9% of all items, a narrower range than is recognized by the World Trade Organization‘s Agreement on Agriculture. Among the major domestic agricultural items not included were frozen pork, grapes, chicken, citrus, and dairy products.

The duty abolition and safeguard periods are also of questionable fairness. Safeguards are guaranteed for ten years after duty abolition on automobiles and textiles because they were classified as vulnerable items by the US. Protections for South Korean agricultural products either cannot be triggered at all once the duty abolition period has ended or some can only last for two to three years