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SEOUL, March 11 (Yonhap) -- Nearly one year after the Korea-U.S. free trade agreement (FTA) was implemented, the bilateral trade deal has proven to be both a new opportunity and crisis for South Korean farms, experts and market observers here said Monday.
Contrary to earlier concerns and even forecasts by both governments of the two countries, the United States' food and agriculture exports to South Korea have plunged since the Korea-U.S. FTA went into effect on March 15, 2012 while shipments of the country's food and agriculture products to the U.S. have jumped at a double-digit rate.
According to the Ministry of Food, Agriculture, Forestry and Fisheries, the country's imports of American agricultural products from March 15 to Dec. 31 of last year tumbled 18.5 percent from the same period a year earlier.
The country's exports to the U.S., on the other hand, surged 10.7 percent from a year earlier in 2012, much faster than the 4.1 percent on-year rise for the country's overall food and agriculture exports.
Ministry officials attributed the rise in shipments to the U.S. to the improved price competitiveness of South Korean products due to a removal of import tariffs under the bilateral FTA.
"The country will seek to further expand its market in the U.S. as the removal of import tariffs will continue to strengthen the price competitiveness of its farm products," an official said, asking not to be identified.
Still, many believe the unexpected phenomenon, at least in terms of falling U.S. exports to South Korea, may only be temporary, noting last year's drop in U.S. farm products to the country was mainly due to a poor harvest in the United States.
For instance, shipments of U.S. corn to the country were more than halved from around US$1.6 billion in 2011 to less than $600 million last year.
Shipments of U.S. beef to South Korea also plunged 21.6 percent on-year to some $410 million during March 15-December 31 of 2012, but apparently because of a fresh outbreak of mad cow disease in the United States last year, they claimed.
The United States still is the world's largest exporter of beef to South Korea with a 35.4 percent share of the country's market for imported beef last year, according to the agriculture ministry.
"Imports of food and other agriculture products from the United States have nowhere to go but up as the Korea-U.S. FTA is designed to gradually reduce or completely remove our country's import duties on many other American products," an observer said.
Some of the products that immediately benefited from the FTA included oranges and cherries as the Korea-U.S. FTA reduced South Korea's 50-percent import tariff on oranges to 30 percent while completely removing a 24-percent import duty on American cherries.
From March 15 to Dec. 31 of 2012, shipments of U.S. oranges to the country surged 33.4 percent on-year to $148 million with those of cherries rising 78 percent to $80 million, the agriculture ministry said earlier.
Before the trade agreement was implemented, it was expected to lead to a reduction of nearly 13 trillion won ($11.9 billion) in production by South Korea's agricultural, farming and fisheries industries in the next 15 years.
Seoul has plans to provide up to 54 trillion won in either cash support or tax incentives to the agricultural sector to help make up for their anticipated losses.
The experts, however, said the only viable long-term solution was to improve the competitiveness of South Korean farmers and their products.
"Over the past year, we have seen the possibility of our food and agricultural products in the U.S. market," an expert said. "The logical move by the government will be to spend its money on improving the competitiveness of farmers, rather than on making up for their losses."
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