U.S. dairy producers are concerned that, if President Trump pulls out of the South Korea-U.S. (KORUS) trade agreement, it could have significant impacts on the industry.
In April, Trump called KORUS a “horrible deal” that has “destroyed” the United States.
And on July 12, United States Trade Representative Robert Lightizer called for special sessions of discussions to address concerns.
South Korea imported 94 million pounds of U.S. cheese last year. Early estimates indicate the country could import more cheese by 2021, according to the U.S. Dairy Export Council (USDEC). Only Mexico imported more American cheese than South Korea.
If the trade agreement between South Korea and the United States dissolves, “U.S. cheese exports to Korea would be subject to the pre-FTA tariff of 36 percent, while all of our key competitors could keep shipping millions of pounds of cheese duty-free,” the USDEC said.
Dairy cows don’t produce milk based on the world markets and farmers looking for new customers as a result of a loss of a trade relationship would be doing so from a position of weakness.
“We can’t cut supply to match the fall of demand that would happen if (South) Korea quit buying dairy products from this country,” Ken Nobis, president of the Michigan Milk Producers Association, told Michigan Radio on Sept. 3. “It could have an impact globally. Because we would in turn try to find another customer and the way you try to find another customer is you cut prices. It’s very tenuous.”
Other farm groups have also voiced their concerns with the President’s proposed action.
South Korea imports 1.3 million tons of soybeans annually, about half of which come from U.S. producers.
And the American Soybean Association (ASA) is frustrated it has to continually defend global trade to the President.
“The idea that we’re the only game in town when it comes to selling soybeans or other agricultural products abroad is false,” ASA president Ron Moore said in a Sept. 3 statement. “Trade makes our local businesses and our communities stronger.
“Yet whether it’s South Korea, Mexico and Canada, or our neighbors on the Pacific Rim, we once again find ourselves fighting to communicate the value of trade to farmers.”
American wheat farmers are forecasted to ship 4.56 million metric tons of wheat to South Korea in 2016-2017, according to wheat grower organizations. South Korea is the third-largest market for American wheat.
Therefore, the U.S. Wheat Associates (USW) and National Association of Wheat Grower (NAWG) are also urging President Trump to stay the course and keep KORUS as is. Walking away from the negotiating table creates opportunities for other countries.
“Any disruption in the relationship (American) wheat growers have built in (South) Korea over more than 60 years gives Australia, Canada and even Russia an opening to move in and take business away from us…,” Mike Miller, USW chairman, said in a Sept. 4 statement.