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Wednesday, August 17, 2011

U.S.-South Korea Beef Dispute: Issues and Status

Remy Jurenas
Specialist in Agricultural Policy

Mark E. Manyin
Specialist in Asian Affairs

The Obama Administration had been pressed to resolve the terms of U.S. beef access to South Korea before the Korea-U.S. Free Trade Agreement (KORUS FTA) goes to Congress for debate. While Korea committed in the FTA to reduce its 40% tariff on imported U.S. beef over a 15-year period, its limits on such imports for human health reasons threatened to undercut this preferential benefit for U.S. exporters. In 2003, South Korea was the third-largest market for U.S. beef exports, prior to the ban its government imposed after the first U.S. cow infected with mad cow disease, or BSE (bovine spongiform encephalopathy), was discovered. U.S. efforts to regain full access became intertwined with the subsequent KORUS negotiations, but did not yield results by the time those talks concluded in April 2007. In reaction, some Members of Congress stated their consideration of, and support for, KORUS depends on South Korea fully opening its market to U.S. beef.

On April 18, 2008, U.S. and South Korean negotiators signed a protocol, or agreement, on sanitary rules that Korea will apply to beef imports from the United States. It allows for imports of all cuts of U.S. boneless and bone-in beef and certain beef products from cattle, irrespective of age, as long as specified risk materials known to transmit mad cow disease are removed and other conditions are met. Though the U.S. beef industry and U.S. policymakers welcomed this deal, Korean TV coverage and Internet-spread rumors that questioned the safety of U.S. beef resulted in escalating protests and calls for the beef agreement to be renegotiated or scrapped. U.S. officials countered that measures already in place to prevent the introduction of BSE in U.S. cattle herds meet international scientific standards. To address rising public pressure, the Korean government twice pursued talks with the United States to find ways to defuse these concerns without “renegotiating” the beef protocol. This culminated in the June 21, 2008, confirmation by both governments of a “voluntary private sector” arrangement that allows Korean firms to import U.S. beef produced from cattle only under 30 months of age. Both governments view this as a transitional step until Korean consumer confidence in the safety of U.S. beef improves.

Since the resumption of U.S. beef exports in July 2008, U.S. exporters have worked to recapture this key overseas market. Beef exports to South Korea in 2010 totaled $518 million, about twothirds of the record 2003 level. In 2011’s first five months, exports (at $331 million) were twice the level recorded in the same period the year before. Promotional efforts to rebuild consumer confidence in U.S. beef, aggressive marketing efforts by large store chains, and much lower retail prices for imported beef than for Korean beef account for the continued growth in U.S. beef sales.

Following President Obama’s mid-2010 decision to present the KORUS FTA to Congress in 2011, Administration officials worked to resolve the beef and auto issues with South Korea. By the time bilateral talks concluded on December 3, 2010, the beef issue reportedly had received little discussion as both sides focused on revising the auto provisions. Korea’s position was shaped by the memory of the size and intensity of the 2008 anti-beef agreement protests. President Obama, in discussing this outcome, stated that the United States will continue to work toward “ensuring full access for U.S. beef to the Korean market.” To address lingering congressional concerns, the Administration in early May 2011 committed to request consultations with South Korea on the “full implementation” of the protocol as soon as KORUS takes effect, and to provide additional funds for U.S. beef promotion activities in the Korean market. Beef and meat industry groups have welcomed the steps made since to submit KORUS to Congress, have expressed their support, and have urged Congress to move quickly to ratify it.

Date of Report: August 3, 2011
Number of Pages: 19
Order Number: RL34528
Price: $29.95

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