Impact of the South Korea-U.S. Free Trade Agreement on the U.S. Livestock Sector

Jacinto F. Fabiosa, Dermot J. Hayes, Fengxia Dong
November 2007  [07-WP 455]

The recently signed Korea-U.S. Free Trade Agreement (KORUS FTA) grants the U.S. livestock industry with preferential access to South Korea's import market. This study evaluates the likely impacts of the KORUS FTA on the U.S. livestock sector.

Using the Food and Agricultural Policy Research Institute's modeling system, we find that livestock prices increase by 0.5% to 3.8% under the agreement. And together with an expansion by 381 to 883 million pounds in meat exports, the value of U.S. exports increase by close to U.S.$2 billion, or a 15.2% increase.

Because of differential baseline starting market shares and differential rates and staging specifications, the beef sector results are primarily driven by trade diversion impacts, while a combination of trade diversion and trade creation characterizes the results in pork and poultry sectors.

Keywords: dairy, free trade agreement, livestock, poultry, trade creation and diversion.

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