Animal Disease Outbreaks and
South Korea's Meat Trade
Animal disease outbreaks beginning early in 2000 have seriously
disrupted trade, production, and consumption of meat in South
Korea, one of the world's major meat importing countries.
U.S. beef and poultry meat exports to South Korea, the third
largest foreign market for U.S. meat, have been heavily affected by
outbreaks of Bovine Spongiform Encephalopathy (BSE, or "mad cow"
disease) and Avian Influenza. ERS provides information about the effects of BSE on U.S. markets and trade and
is conducting research on the growing effects of several animal
diseases on meat markets.
Beef imports, the most important part of South Korea's
meat trade, were disrupted by South Korea's ban on imports from the
United States, its largest supplier, in late December 2003. South
Korea banned U.S. imports of beef meat and offals because of the
discovery of one case of BSE in Washington State. An agreement 
on
April 18, 2008, between the United States and South Korea to fully
reopen the Korean market to U.S. beef exports entered into force on
June 26, 2008.
The largest component of South Korea's imports from the United
States is frozen beef. Analysis of the trade in 2000 by the U.S.
Meat Export Federation showed that over half of this beef was from
two cuts, the short rib and chuck roll. Aided by the successful
resolution of several World Trade Organization (WTO) cases (see below), imports of chilled beef
became feasible and showed rapid growth in 2001-03. South Korea has
been one of the most important U.S. markets for beef offal, with
import value reaching $73 million in 2003. In general, South Korea
imports beef cuts and organs that its consumers have a higher
preference for than U.S. consumers do. Therefore, U.S. producers
can sell these parts to South Korea for a higher price than they
would get if they remained in the U.S. market.
South Korea: Imports of bovine
products from the United States
Calendar year
|
Product
|
Unit
|
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
| Chilled beef |
Million US$ |
18
|
17
|
39
|
85
|
1
|
0
|
0
|
14
|
8
|
27
|
52
|
74
|
| 1,000 metric tons |
5
|
4
|
9
|
16
|
0
|
0
|
0
|
2
|
1
|
5
|
8
|
10
|
| Frozen beef |
Million US$ |
474
|
303
|
553
|
728
|
95
|
4
|
0
|
80
|
186
|
246
|
343
|
525
|
| 1,000 metric tons |
128
|
99
|
192
|
208
|
25
|
1
|
0
|
12
|
31
|
55
|
77
|
106
|
| Beef offals |
Million US$ |
41
|
41
|
64
|
73
|
8
|
0
|
0
|
0
|
3
|
12
|
27
|
54
|
| 1,000 metric tons |
13
|
15
|
27
|
25
|
2
|
0
|
0
|
0
|
0
|
2
|
8
|
13
|
| Meat extracts |
Million US$ |
8
|
6
|
7
|
6
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
| 1,000 metric tons |
1
|
1
|
1
|
1
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
| Total |
Million US$ |
542
|
368
|
663
|
893
|
103
|
4
|
0
|
94
|
197
|
286
|
422
|
653
|
| 1,000 metric tons |
148
|
119
|
229
|
250
|
28
|
1
|
0
|
14
|
32
|
62
|
93
|
128
|
|
Source: World Trade Atlas, using official Korean import
statistics.
Note: imports in 2004 and 2005 represent products that had cleared
health inspection but not customs inspection prior to the date the
import ban was imposed, December 24, 2003.
|
Imports from New Zealand and Australia increased in 2004 and
2005 above 2003 levels, but replaced only a fraction of the 2003
volume of imported U.S. beef. Total imports of frozen beef fell by
one half, chilled beef imports declined by over 40 percent in 2004
before rebounding in 2005, and beef offal imports fell by over 50
percent. South Korean beef consumption fell by 23 percent in 2004
in response to reduced demand caused by consumer concerns and
reduced supply as a result of the import ban, and fell even more in
2005. Consumption began to rise in 2006, but, through 2011, had not
regained levels reached in 2003 and earlier.
South Korea: Beef imports by
country
|
Country
|
|
|
|
|
|
|
|
2005
|
2006
|
2007
|
2008 |
2009 |
2010 |
2011 |
|
|
|
|
United States
|
|
|
|
|
|
1
|
0
|
14
|
32
|
59
|
85
|
115
|
|
Australia
|
|
|
|
|
|
126
|
163
|
161
|
136
|
130
|
139
|
153
|
|
New Zealand
|
|
|
|
|
|
48
|
45
|
40
|
38
|
33
|
34
|
34
|
|
Canada
|
|
|
|
|
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
Others
|
|
|
|
|
|
3
|
5
|
4
|
4
|
2
|
4
|
5
|
|
Total
|
|
|
|
|
|
178
|
213
|
220
|
211
|
225
|
261
|
308
|
Source: World Trade Atlas, using official Korean
import statistics.
Note: fresh, chilled, and frozen beef from HS codes 0201 and 0202.
Imports from the United States in 2004 and 2005 represent products
that had cleared health inspection but not customs inspection prior
to the date the ban was imposed, December 24, 2003. |
Poultry meat imports by South Korea were disrupted in
2004 by bans imposed because of outbreaks of Avian Influenza in
several exporting countries. South Korea banned imports from
Thailand and China in January 2004, and imports from the United
States in February 2004. At the same time, South Korea's own
poultry flock was devastated by an outbreak of Avian Influenza, and
South Korea's small export trade to Japan was banned by Japan.
South Korea reopened trade in heated chicken meat products in
July 2004-influenza viruses are killed by exposure to high
temperatures. In May 2005, South Korea lifted its ban on imports of
fresh, chilled, and frozen chicken meat from the United States.
Bans on unheated poultry meat from China and Thailand remain in
place.
Because South Korea had not finished the process of certifying
Brazilian broiler slaughter and processing facilities for imports
by South Korea, the Avian Influenza bans meant that only parts of
Europe could feasibly export poultry meat to South Korea in 2004.
South Korea's consumption of broiler meat fell by 13 percent in
2004. Brazilian plants became eligible to export poultry meat to
South Korea in early 2005, and Brazil now has become a large
supplier.
South Korea: imports of poultry meat
and offals by country
|
Country
|
|
|
|
|
|
|
|
2005
|
2006 |
2007 |
2008 |
2009 |
2010 |
2011 |
|
|
|
|
United States
|
|
|
|
|
|
23
|
43
|
24
|
37
|
32
|
56
|
88
|
|
Thailand
|
|
|
|
|
|
5
|
3
|
4
|
6
|
5
|
9
|
11
|
|
China
|
|
|
|
|
|
7
|
12
|
13
|
8
|
4
|
6
|
7
|
|
European Union-27
|
|
|
|
|
|
26
|
5
|
2
|
3
|
2
|
4
|
4
|
|
Brazil
|
0
|
0
|
0
|
0
|
0
|
1
|
16
|
23
|
21
|
30
|
34
|
25
|
|
Others
|
|
1
|
1
|
0
|
0
|
0
|
0
|
1
|
0
|
0
|
1
|
2
|
| Total |
78
|
95
|
102
|
96
|
34
|
62
|
79
|
66
|
74
|
74
|
110
|
137
|
Source: World Trade Atlas, using official Korean
import statistics.
Note: includes fresh, chilled, and frozen products (HS 0207),
which may be subject to an import ban because of avian influenza,
and prepared meat (HS 160231, 160232, and 160239), which is not
banned. |
Pork exports by South Korea to Japan ended in March
2000 because of an outbreak of foot-and-mouth disease (FMD). While
Japan subsequently recognized that South Korea was again FMD free,
an outbreak of classical swine fever in South Korea in October 2002
triggered a second ban on exports to Japan, before the FMD ban had
expired. Except for the Korean island province of Cheju, the
possibility of exports to Japan is foreclosed until 1 year after
the last vaccination against classical swine fever occurs.
Outbreaks of FMD in South Korea in 2010 and 2011 will further
constrain Korean exports.
Top of page
South Korea's World Trade
Organization Cases
The Uruguay Round
Agreement on Agriculture (URAA) set new rules for trade. Among
the first cases before the WTO were complaints that South Korean
import restrictions violated these rules. The United States
challenged South Korea's restrictions in four agriculture-related
WTO cases, and the outcomes reformed South Korea's treatment of
food and beverage imports.
Shelf Life
The United States and South Korea reached a settlement on shelf
life in July 1995. South Korea agreed to phase out its
government-mandated expiration dates and, similar to most other
countries, allow manufacturers to set their own "use-by" dates.
Effective on July 1, 1996, the new system applied to chilled,
vacuum-packed pork and beef and all frozen food, including beef,
pork, and poultry. For all dried, packaged, canned, or bottled
products, the manufacturer's use-by system went into effect on
October 1, 1995. The 1995 agreement also covered other concerns
raised in the petition, such as pork tendering procedures and
temperature requirements.
South Korea's shelf-life issue was a precedent-setting case for
settling disputes on trade barriers couched as food safety
regulations under WTO Article XXII. "Shelf life" of a product means
the period between the date of manufacture of the product and the
date by which a product must be sold at the retail level. South
Korea imposed an official shelf-life requirement on imported foods
while most countries in the world relied on manufacturer determined
"use-by" dates to control food safety quality. In particular, South
Korea's government-mandated shelf-life requirements effectively
prohibited imports because the expiration dates on the products
were so short that, by the time a product cleared South Korean
customs inspections and reached the shops, the dates were close to
expiration or had already expired.
The issue ignited in February 1994 when South Korea suddenly
enforced a 30-day shelf life for imported U.S. sausages. The
dispute over U.S. sausage shelf life also expanded to other meat
imports and then to a wide variety of food, including canned and
frozen foods, bottled water, and dried and packaged products. South
Korea ultimately reversed itself and extended the shelf life for
sausages to 90 days in January 1995, but not until the U.S. meat
industry filed a Section 301 petition. In November 1994, the U.S.
Trade Representative (USTR) accepted a Section 301 petition filed
by the U.S. meat industry (the National Cattlemen's Association,
the National Pork Producers' Council, and the American Meat
Institute). In its investigation, USTR found that South Korean
shelf-life standards were not supported by scientific studies and
were applied in an arbitrary and discriminatory manner. The
bilateral consultations between the United States and South Korea,
however, broke down at the end of April 1995, and the United States
requested WTO consultations on May 3.
Informal consultations organized by the Chairman of the WTO
Committee on Agriculture obtained a favorable settlement without
proceeding all the way through the dispute settlement panel
process. South Korea, however, continues to maintain
government-mandated shelf-life requirements for sterilized milk
products such as ultra heat-treated milk and for bottled water. The
United States reserves the right to use WTO dispute settlement
procedures to address these restrictions.
Distilled Spirits
South Korea's liquor taxes favored soju, a traditional drink,
and discriminated against whisky and other Western-type distilled
spirits. A WTO panel ruled against South Korea in a complaint filed
by the European Union (EU) and the United States, and a subsequent
appeal also failed in January 1999. After arbitration about the
length of time in which compliance was required, South Korea
harmonized its taxes on imported and domestically produced liquor
on January 1, 2000.
South Korea assessed significantly higher excise taxes on
imported and domestic Western-style distilled spirits than on soju.
Soju was taxed at 35 percent, but whisky and brandy were taxed at
100 percent, other distilled spirits at 80 percent, and liquors at
50 percent. South Korea's education tax further compounded the
discrimination between imported and domestic distilled spirits. A
30-percent education tax was imposed on distilled spirits whose
excise tax was 80 percent or higher, but the tax was only 10
percent on spirits, such as soju, whose excise tax was under 80
percent. South Korea's discriminatory tax on distilled spirits had
the effect of sharply raising their prices, which significantly
diminished competitiveness. These tax measures were similar to the
Japanese tax measures on alcoholic beverages that were found to be
inconsistent with WTO rules in December 1997.
USTR raised the distilled spirits issue with South Korea in
October 1996 and sought a timetable for the reduction of taxes on
Western-style spirits. On April 2, 1997, the EU, the principal
supplier to the South Korean market, requested consultations under
WTO dispute settlement procedures. The United States participated
in these consultations as an interested third party.
Import Clearance
Procedures
For years, South Korea's burdensome, slow, import-clearance
process-frequently out-of-step with international norms-was one of
the most cited trade barriers to U.S. agricultural exports. After
two rounds of talks, South Korea revised its procedures to allow
fresh produce to clear customs within 5 working days. Since then,
the consultations between the two countries have continued
concerning other issues of import clearance process.
In April 1995, the United States requested consultations under
the WTO dispute settlement procedures after U.S. exporters
complained that grapefruit and orange shipments were detained at
the port for up to 3 weeks, causing catastrophic levels of
decay.
Consultations between the United States and South Korea since
1995 resulted in certain changes in South Korean procedures,
including:
- establishment of expedited (5 working days) clearance
procedures for fresh produce;
- development of a new sampling system to replace 100 percent
sampling;
- abolition of sorting requirements for horticultural
products;
- elimination of mandatory incubation testing for California
fruit;
- development of a quarantine pest list to determine fumigation
requirements;
- revision of some of the South Korean food additive standards to
bring them into closer conformity with the standards of the Food
and Agriculture Organization/World Health Organization Codex
Alimentarius Commission; and
- elimination of the requirement for manufacturing process
information and ingredient listing by percentage for all
ingredients.
South Korea's import clearance procedures remain problematic.
Imports of new food products into South Korea reportedly take
considerably longer to clear the port than similar products in
other Asian countries.
Treatment of Imported
Beef
Except for rice, beef was the last major commodity liberalized
by South Korea. The liberalization process began in 1988, first
under the rules of the General Agreement on Tariffs and Trade
(GATT), and, from 1995 on, under the auspices of the WTO.
Under a record of understanding between the United States and
South Korea signed in July 1993, and extended in December 1993,
South Korea agreed to import certain quantities of beef each
year-establishing minimum import quotas (see policy). The size of the quotas would rise
through 2000, and the quota system would disappear in 2001.
Although the record of understanding spelled out rules that
encouraged fair marketing of the imported beef, South Korea's
government discriminated against imported beef in several ways:
- When domestic beef cattle prices were weak, the Government
failed to import the agreed-on minimum amounts (in 1997, 1998, and
1999).
- Beef imports had to be designated in advance to go into certain
marketing channels and could not be shifted among them if market
conditions changed.
- Retail shops had to register as sales points for domestic or
imported beef, but not both. This naturally limited retail interest
in selling imported beef.
The system as applied inhibited efforts to market U.S. beef
directly to consumers. The market for chilled-as opposed to
frozen-beef imports, for example, was slow to develop, compared to
the results in nearby Japan.
Consultations held in March 1999 failed to achieve an agreement,
and a Dispute Settlement Body (DSB) was formed in May 1999. In July
1999, an Australian case against South Korea's beef import regime
was added to the U.S. case before the same DSB.
In its case, the United States complained that:
"South Korea has established a regulatory scheme that
discriminates against imported beef by confining sales…to
specialized stores, limiting the manner of its display, and
otherwise constraining the opportunities for the sale of imported
beef. In addition to the regulatory scheme…Korea imposes a markup
on sales of imported beef, limits import authority to certain
so-called supergroups and the Livestock Producers Marketing
Organization, and provides domestic support to the cattle
industry…in amounts that cause Korea to exceed its aggregate
measure of support as reflected in Korea's WTO schedule." U.S.
Trade Representative, Highlights in U.S. International Trade
Dispute Settlement, October 25, 2000.
The DSB issued a final report on July 31, 2000, upholding the
United States, finding that South Korea's retail distribution
system for beef was discriminatory and that South Korea must
include certain payments to the beef sector in computing its
Aggregate Measurement of Support. South Korea appealed the result,
but the appeal failed and the DSB adopted the appeal panel's
decision on January 10, 2001. South Korea must now bring its
measures into compliance with the WTO rules within a "reasonable"
period of time.
References
- Fact Sheet on South Korea Beef Protocol,
U.S. Trade
Representative, June, 2009.
- Global Beef Trade: Effects of Animal Health,
Sanitary, Food Safety, and Other Measures on U.S. Beef
Exports, U.S.
International Trade Commission, Sept. 2008.
- Methodology and Results of the Value of Beef Exports Analysis,
U.S. Meat Export Federation, 2002.
- Structure of the Global Markets for Meat,
USDA, Economic Research Service, September 2003. http://webarchives.cdlib.org/sw1vh5dg3r/http:/ers.usda.gov/Publications/AIB785/
- Trade Policy Agenda and National Trade Estimate Report on
Foreign Trade Barriers, U.S. Trade Representative.
- South Korea: Food and Agricultural Import
Regulations and Standards, FAS, January
2011.