Washington Potatoes Greatly Benefit From KORUS FTA

Having been touted as one of the most significant free trade agreements for the United States in nearly two decades, March 15, 2014 will mark the two-year anniversary since the United States-Korea Free Trade Agreement (KORUS FTA) went into force.  The KORUS FTA has provided an opportunity to increase trade amongst the two nations and specifically has allowed for the elimination or phasing out of tariffs and quotas on agricultural products.

“In this short time the agreement has already proved to be extremely beneficial for the Washington state potato industry,” said Matt Harris, the Director of Governmental Affairs for the Washington State Potato Commission. “Specifically within the KORUS FTA, Korea agreed to immediately eliminate its 18% tariff on U.S. frozen fries.”

With the majority of U.S. frozen potato products being exported to Korea originating from either Washington or Oregon, the agreement has already been particularly beneficial to the region’s frozen potato processing industry. The tariff reduction went into effect on March 15, 2012.  In 2011, the year before the FTA, the US exported $53 million worth of fries to Korea.  As a direct result of KORUS FTA in 2013, the first full year of the FTA being in effect, the US exported $83 million worth of fries to Korea.  An increase of 57%.  Korea is now the fourth largest fry export market for the US.

As a proven model of success, KORUS FTA has shown the impact additional trade agreements could have for the U.S. and Washington state.  This year, the U.S. and 11 other Asia-Pacific countries are seeking to complete the Trans-Pacific Partnership (TPP), a trade agreement that will reduce trade barriers and strengthen farm related exports between the United States and many growing markets.

“Trade is the primary engine of Washington’s economy and trade partnerships greatly benefit our state by opening up new markets for Washington goods and services, increasing our capacity to serve as an international gateway for other states,” said Harris.

Washington state is a gateway to the global economy as farms have exported $15 billion of agricultural products in 2013. “U.S. potato growers exported over $1 billion of frozen potato products, and more than 70 percent of them transited through Washington ports, creating jobs along the value chain of harvesting, processing, packaging and transportation,” said Harris.

One of the challenges facing the future of trade is the lack of presidential Trade Promotion Authority (TPA), or fast-track authority. Since final trade agreements are subject to congressional edits and input, the process of negotiating complex agreements is next to impossible. Since 1974, U.S. presidents have generally been granted the power to negotiate trade agreements that could not be changed by Congress. Instead, once the agreement was presented to Congress, it would need to be voted on within 90 days without amendment. As a way to ensure a positive outcome on a congressional vote, extensive consultations between the legislative and executive branches are undertaken during the negotiation process. The TPA worked for the passage of KORUS FTA.

The value of trade and economic development for Washington potato farms means more support to produce those potatoes, more shifts in factories, more packaging needed, more transportation used, more port jobs, and more tax revenue.