Analysis of the recently approved U.S. free trade agreement with South Korea in the April-June 2011 issue of California Agriculture journal shows how California farm exports will now have much improved access to the large South Korean market, significantly enhancing competitive prospects for almonds, walnuts, dairy products, beef and oranges, among other important California commodities.

Legislation implementing the Korea free trade agreement, along with smaller agreements with Colombia and Panama, were negotiated several years ago. They finally gained congressional approval on Oct. 12.

By phasing out or eliminating tariffs and other trade barriers, free trade agreements create larger markets for California-produced farm commodities. Since South Korea has no significant prospects to export farm goods to the United States, California agriculture is a clear winner from this agreement.  

Hyunok Lee and Daniel Sumner of the UC Davis Department of Agricultural and Resource Economics and the UC Agricultural Issues Center document the current importance of South Korea to California farm exports, the size of the trade barriers these exports have faced (many facing tariffs of more than 30 percent) and the advantages currently afforded by South Koreas existing free trade agreements with important competitors, such as Chile and Australia.

Lower trade barriers will allow California agriculture to better compete in a large, growing and lucrative market, said Sumner.

Food product prices are high in South Korea and consumers are willing to pay premiums for the high-quality products produced in California, added Lee.

South Korea has a strong economy with about 50 million consumers and per-capita income of $30,000, higher than many European countries. In 2010, the value of California farm exports to South Korea was more than $400 million.  Given the size of South Korea's economy and the high trade barriers being erased, Sumner and Lee say the accord will do more for farm exports than agreements negotiated for almost 20 years.