Changes in the Trade of Agricultural and Livestock Products and Implications after Seven Years from the Enforcement of the Korea-EU FTA

Abstract

 In Year 7 of the implementation of the Korea-EU FTA, the import value of agricultural and livestock products from EU countries is USD 4.33 billion, a 105.1% increase from the average year before the enforcement and a 9.2% increase from Year 6. – The degree of the opening of the agricultural and livestock market for the Korea-EU FTA that took effect on July 1, 2011 is 96.2%. The impact of reduced tariff has been visible for the recent seven years, while the trade volume of TRQ-applied items has also been on the rise. – The imports from the EU take up 13% in the total import value of agricultural and livestock products, a 0.3%p increase from Year 6. – The import value of processed food, fruits and vegetables, and livestock products jumped by 20.4%, 16.6% and 5.9%, respectively, from Year 6. On the contrary, the import value of grains from the EU dropped by 37.9% from Year 6 due to the increased import of U.S. and Russian wheat and the expanded production of corn in the U.S.

 As of Year 7, the value of agricultural and livestock products exported from South Korea to EU countries is USD 460 million, up 132.2% from the average year before the enforcement and up 1.5% from Year 6. – Exports to EU countries account for 6.4% in the total export value of agricultural and livestock products in the country, a 0.39%p decrease from Year 6. – In the category of agricultural products, the value of fruits and vegetables (oyster mushroom, kimchi, pear) exported to the EU increased by the largest degree. As of Year 7, the value of fruits and vegetables exported to the EU jumped by 19.4% from Year 6.

 As of Year 7, the preferential tariff application rate of the imported agricultural and livestock products from EU countries is 84.3%, a 1%p decline from Year 6, while that of such products exported to EU countries is 51.1%, a 1%p increase from the previous year. – The preferential tariff application rates of pork and cheese imported from the EU have been on the steady rise every year, now reaching almost 100% (99.9% and 98.9%, respectively). – The preferential tariff application rates of products exported to the EU are lower than those of imported products. In particular, the preferential tariff application rate of composite food preparations, which take up a large share in the total value of exports to the EU, has been on the steady decline, recording 36.4%, a 0.4%p decrease from Year 6.

 In the trade between South Korea and EU countries, the former is specialized in imports, showing an imbalanced structure. – South Korea’s TSI of agricultural and livestock products is –0.65 in the total international trade and –0.81 in the trade with EU countries, indicating a larger volume of imports than exports.

 The government spent KRW 6.7 trillion for the Korea-EU FTA supplementary measures for the recent seven years from 2011 to 2017, with the budget execution rate at 86.5%. – The supplementary measures resulted in visible outcomes, including the enhanced productivity of livestock farms, reduced expenses, and stabilized supply and demand.