PORK Case

Pork Imports in Korea (PORK)


          CASE NUMBER:         119 
          CASE MNEMONIC:      PORK     
          CASE NAME:          Pork Imports in Korea

I.        Identification
1.        The Issue 
     This case involves non-tariff trade barriers erected by the
South Korean government to keep American raised pork and other red
meat products from competing with highly subsidized domestically
raised Korean pork products.  Technically, South Korea is an open
market for this type of commodity, but through non-tariff trade
barriers set in place prior to 1988 the Korean market is still
difficult to penetrate in many industries.  Since Congress passed
the Omnibus Trade Act of 1988, Congress has often taken the lead in
changing unfair trading practices of U.S. trading partners.  Under
clause 301 of the Omnibus Trade Act, South Korea is currently under
investigation by the USTR.  The USTR is responding to a complaint
from the National Pork Producers Council, American Meat Institute
and from the National Cattlemen's Association.  House and Senate
Pork Industry Congressional Caucus members are circulating letters
addressed to Korean Ambassador Kun Woo Park to voice their
opposition to the current non-tariff trade barriers.  In 1995,
Korea agreed to allow U.S. pork imports.  At stake in Korea is the
protection of their agricultural sector and the environment this
sector has more or less preserved during the country's rapid
industrialization since the 1960's.  By allowing larger access to
red meat imports as well as other commodities (such as rice), the
Koreans could potentially lose large agricultural areas to
urbanization and industrialization and the degradation that
accompanies such development.
2.        Description
      This trade dispute between the U.S. and Korea is a continuing
and ever changing process.  This dispute is surprising given that
the U.S. is South Korea's largest trading partner and largest
export market.  South Korea is also the U.S.'s fourth largest
market for agricultural products.
y  Section 301 has been used before by the USTR to force the
opening of the Korean and other markets.  Issues involved in this
area have been parts of bilateral trade agreements made between the
two countries in the past decade.  But it seems that whenever a
barrier is pulled down by an agreement, another is quickly erected
by the Koreans.  Pork producers are discouraged from exporting to
Korea due to several non-tariff barriers.   These include Korean
government supported, scientifically unsubstantiated shelf life
requirements for the meat.  Also, time consuming port clearance and
inspection procedures are also used, taking as long as three weeks.

This is an inordinate amount of time given the perishability of the
product, even while frozen.  Last year alone, U.S. pork producers
lost over $240 million due to these barriers.  Should the barriers
remain in place that number will reach $1 billion by the turn of
the century.
     This type of trade barrier should not come as a surprise to
many given Korea's past concerning its domestic commodities. 
Farming and the agrarian lifestyle are an integral part of the
political culture of Korea.  It is in the interest of a plurality
of Korean's that their government do what it can to preserve this
lifestyle in the midst of rapid industrialization and urbanization.

Barriers to this type of trade are looked upon through an
emotional, rather than economic lens.
     However, Korea is not conducive to a large-scale agriculture
practices.  There is a small amount of arable land in a country
which is one of the most densely populated in Asia.  Korea is a
dichotomy of sorts between the industrialized and rural sectors of
the economy.    Although second to only Japan in Asia for economic
growth and prosperity, the Koreans have approximately 15 percent of
their population working on a farm.  This is a high level for
Korea, given their relatively high level of economic development. 
This sector is finding it difficult to specialize and become
competitive on the world commodity market because of ecological
reasons.  Much of the arable land in Korea is suitable only for
flooded rice culture and not conducive to the other types of
agriculture the government wishes to promote.  
     Red meat production is almost entirely dependent upon the
importation of grain, making this type of agricultural business
uncompetitive in the global marketplace.  Thus, the Korean
government has made price supports and import quotas the
centerpiece in keeping its agricultural sector economically
viable.  In so doing, the Korean government is also indirectly
protecting large areas of its country from the sprawl of
urbanization and industrialization which have the effect of
polluting and destroying the environment.  Protecting the
environment and social structure of its country are not its prime
motivations in creating the trade barriers but they have become an
indirect aspect of this policy.
     By opening the doors to cheaper pork and other red meat
products, Korea could indirectly speed up the process of urban and
industrial environmental destruction.  This is evident by the ways
in which rural land values on the outskirts of cities have
increased significantly in value in the last few years.  Korean
environmental standards are far from the level of the U.S. or the
European Union.  Therefore, it is the Korean farmer which has the
most to lose immediately with the opening of Korea to U.S. red meat
imports.  The Korean pork farmer will lose the most in the short
term through a loss of livelihood.  This will invariably force
greater stress on the urban areas of South Korea, as rural-urban
migration increases as farmers seek for employment alternatives. 
Eventually, the entire peninsula and its inhabitants will suffer
from the level of industrialization and accompanying pollution.
3.        Related Cases
     Keyword Clusters         
     (1): Trade Product            = PORK
     (2): Continent                = ASIA
     (3): Environmental Problem    = HABITat Loss
4.        Draft Author:  Andrew W. Roberts
B.        LEGAL Clusters
5.        Discourse and Status: DISagreement
     At this stage there is still considerable disagreement between
the two parties.  The Korean barriers are illegal under GATT law. 
Enforcement of these laws may not occur if enough pressure is put
upon the Korean government from the USTR and Congress.  On March
16, 1995, the Senate passed H.R. 889.  This resolution had an
amendment attached by Sen. Baucus stating Senate criticism of South
Korean restrictions on imports of U.S. Beef and Pork.
6.        Forum and Scope: USA and BILATeral
     No formal law has been invoked, but the current administration
is dedicated to pursuing the case as far as it has to, up to the
newly formed WTO.  U.S. pork producers submitted a complaint to the
USTR under section 301.  This section in the law determines whether
the Korean barriers are indeed unfair and to what extent that U.S.
industry has suffered.
7.        Decision Breadth:  2
8.        Legal Standing:  LAW
     This treaty was signed by both Korea and the United States. 
South Korea does not appear to have a specific written law banning
the import of American pork.  Only the non-tariff barriers and
difficulties in importing pork into Korea have adversely affected
American interests there.  Procedures which occur at the port of
entry are so slow and bureaucratic that South Korean officials
discourage the importation of American pork rather than make an
outright ban on it.
C.        GEOGRAPHIC Clusters
9.        Geographic Locations
     a.  Geographic domain:   ASIA
     b.  Geographic site:     East Asia [EASIA]
     c.  Geographic impact:   USA
     No specific species are threatened in this case.  What is
potentially affected is the rural environment of Korea which is
coming under the pressure of industry and urban areas.  Trade and
environment collide not at the border, but inside the country as
more open trade policies force what farmers are left off of their
land, selling to the highest bidder in a country where land is
scarce and abused by industrial processes.  Agricultural land is
becoming more valuable for other uses than agriculture. 
Industrialists and developers wish to convert much of this land,
much of it surrounding Korea's urban areas to factories and
apartment blocks.  This action would take away viable and needed
land away from the Koreans for recreation and green spaces.  It
would also destroy wildlife habitats as well as potentially pollute
what ground and water sources exist.
10.       Sub-national factors:  NO
11.       Type of Habitat:  TEMPerate
D.        TRADE Clusters
12.       Type of Measure: Import Standard [IMSTD] 
     The main type of trade barrier is import standards for an
unattainable level of quality demanded by the Koreans for U.S.
pork.
13.       Direct vs. Indirect Impacts: DIRect
     These trade barriers are costing U.S. pork producers upwards
of $240 million per year of lost export revenue.  Indirectly,
though the Korean consumer will pay more for pork and could suffer
from future environmental problems if more land is given up for
industrial/urban purposes.
14.       Relation of Trade Measure to Resource Impact
     a. Directly related to product:    YES  PORK
     b. Indirectly related to product:  NO
     c. Not related to product:         NO
     d. Related to process:             YES  HABITat Loss
     Koreans are not necessarily objecting to American pork, but to
American domination of a commodity in which they cannot
successfully compete.  
15.       Trade Product:ct:  PORK
16.       Economic data
17.       Impact of Measure on Trade Competitiveness: MEDium 
18.       Industry Sector: FOOD
19.       Exporters and Importers: USA and KOREA
E.        ENVIRONMENTAL Clusters
20.       Environmental Problem Type: HABITat Loss 
     Land, air and sea are all potentially adversely affected by
increased industrialization in Korea due to a downturn in
agricultural production on the peninsula.  Increased urbanization
and the potential loss of natural areas to factories and slabs of
concrete will destroy ever shrinking wildlife habitats and green
spaces for humans to enjoy.
21.       Name, Type, and Diversity of Species:   unknown
22.       Resource Impact and Effect:  medium  (2) resulting
resource concentration forms that affect the entire environment of
the peninsula if increasing industrialization persists.
23.       Urgency of Problem:  N/A
24.       Substitutes:  Conservation [CONSV]
     The only way to stem the potential environmental damage would
be for Korea to develop a "green" development plan for the rural
areas that could be overtaken by the urban/industrial wasteland. 
They could also improve their environmental standards to the point
that they will stem much of the industrial pollution and not let
industry go unchecked the way it did in the 1960's and 1970's.
F.        OTHER Factors
24.       Culture: YES 
     The culture of the importer is of extreme importance in this
dispute.  As mentioned earlier in this study, the agrarian
lifestyle is an integral part of the Korean pysche and political
culture.  Pork has long been the main type of red meat eaten by
Koreans.  Koreans look at the subsidies and barriers to freer
agricultural trade as being an integral method to retaining its
agricultural sector.  It is not ecologically possible for Korean
farmers to become economically viable through specialization.  This
forces them to rely upon the barriers to cheaper imports for their
survival.  They see these barriers to trade from an emotional
perspective, not through an economic or international free trade
law lens.  It is important to them that they do their part
(whatever that they be) to ensure that the rural population is
retained to a certain extent.  Over 5,000 years of agricultural
practices cannot be wiped out in less than two generations.  The
diet of Koreans is also a factor included with culture.  Pork is a
meat consumed frequently  by Korean households and found in the
national cuisine.
26.       Trans-Border Issues: NO 
27.       Rights: YES 
     This is because the main benefactors of increased trade are in
the United States and the potential for a damaged environment that
they indirectly create will fall into the hands of the South
Koreans.  Another aspect of human rights involved are the perceived
injustices that rural South Koreans suffer.  By coercing farmers to
sell out to the highest bidder and  to relocate to an urban area
because their products are no longer competitive, it could be said
that their human rights have been violated.  
28.  Relevant Literature
Burmeister, Larry.  "Korean Minifarm Agriculture: From
     Articulation to Disarticulation".  The Journal of
     Developing Areas 26, January. 1992), 145-168.
Burmeister, Larry.  "South Korea's Rural Development Dilemma."
     Asian Survey 30/7, July, 1990, 711-723.
Clifford, Mark.  "Barrier Methods".  Far Eastern Economic Review.
     July 19, 1990, 40-41.
Henriques, Diana H.  "Playing Politics Over Pork Exports". New
     York Times.  December 22, 1993, D:1,3.
Merson, John.  "Korea Wakes Up to the Environment".  New
     Scientist.  June 8, 1991, 20-21.
Sutter, Robert G.  "Korea:  U.S. - South Korean Issues in the
     1990's".  Washington, DC, April 3, 1995.  CRS Report IB
     94038.
"The Pork Producers Capitol Connection Legislative Report".
     National Pork Producers Council.  Washington, D.C.
     February 17, 1995.
"The Art of Conceding".  The Economist.  August 5, 1989.
     33-34.  
"It's Tough Going on the Land".  Far Eastern Economic Review,
     June 28, 1990, 48-49.
"The Sacred Chow".  Far Eastern Economic Review, November 11,
     1991, 68-69.

                        

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