Wednesday, February 04, 2009

Ode to a Manioc: Short Discussion on Korea’s Agricultural Tariffs

Ode to a Manioc: Short Discussion on Korea’s Agricultural Tariffs

Average Applied Agricultural Tariffs (Farm Policy Facts)

The recent news that Doha Round ratifications are high on developed nation agendas as a response to global economic crisis may be the impetus required to pass new tariff regulations which could seriously impact upon Korea’s local produce and food production capacities.

Lim Song-Soo describes in “Impacts of the Doha Round on Korea’s Agricultural Tariff Profile”(2008) that reforms have continued progressively since the Uruguay Round Agreement On Agriculture (URAA) which started in 2000 but that the DDA or Doha Development Agenda remains incomplete. All WTO Ministers were in agreement that export subsidies be removed by 2013 however the text of the agreement contained 200 parentheses or options which required resolution as of early 2008. Will ministers be able to ratify the agreement in 2009 or is their will to do merely hot political wind?

Lim describes that Korea once possessed 1,453 tariff lines in its implementation schedule yet progressively increased those to 1,469 in 2007. This would appear counter-intuitive unless Korea is harbouring some as yet undeclared infant agricultural industries. The diminuitive manioc, also known as the lowly yuca, the meagre mogo or middling mandioca, a similar poor cousin to the domestic sweet potato, possesses the highest (most exorbident) import tariff at 887% which then leads to raw pellets, grisley groat and mealy meal, groat being grains or hulled cereals, wholesome oats, whispering wheat, bountiful barley, or bodacious buckwheat with stellar 800% import tariffs. Oh where, oh where is Alfala?


These also represent largest proportions of highest imported food products by coincidence other than meats. Stamina inducing ginsengs and their royal derivatives are protected with tariffs exceeding a whopping 750%. Seedling sesames,bouncing beans, "morning holler" soya products, piddling potatoes, gentle gingers, quivering corns, up-start starch, emerald green teas, glittering garlics and rude red peppers are all imported grudgingly with similar stupendous tariffs. Korea’s tariff quota system reveals few real benefits for local consumers. It appears the entire system which appears to border upon barrier to trade is under serious threat in the case of Doha Ratification as protected or sensitive products will be required to adjust to a tiered set of reduction formulas from one-third, or one-half to two thirds which will slowly benefit consumers with lowered food prices as a hopeful result.

Lim also reveals Korea’s tariffs are 63.2% on average which is near the average for non-OECD nations of which Korea is no longer an outstanding member. In comparison to member nations of OECD of which Korea sought out to be a part, this figure appears bloatedly large. US and EU average agricultural bound tariff rates are under 11% and 23%. OECD averages are 36% with Japan at 42%. Which makes Korea appear perhaps one foot in the developed world and one in the rice paddy. Following Doha Ratification tariff rates on some highlighted products would drop significantly. For example, 82% drops in red peppers and 110% garlic tariffs reductions could be expected, as well tariffs on imported ginseng would need to drop 754% while Korea would be permitted to maintain 8% tariff lines as high tariffs which would translate to maintenance of no more than 118 of its current 1,469 tariff lines as of 2007.

Tariffs on sensitive products which are described as rices, barleys, red peppers, garlic flower, onions, beef and pork, chickens, milk powder, Korean citrus, ginsengs, sesames, chestnut would be subjected to tiered formula reductions in import tariffs at a minimum 33.33% drops overall which might translate into lowered consumer costs somewhere down the road. However it appears difficult to correspond Korea’s OECD membership with a WTO designated developing nation tariff status. At that point Lim describes developed nation tariff reduction scenarios which would meet minimum tariff reductions of 54%. All in all the tariff reductions requirements for Doha Round ratification will be challenging in terms of Korea’s current market access positioning and what many economists see as a wholey protected agricultural market at odds with its OECD or developed nation status.

Rice remains a pot sticking point in terms of market protection and sensitive product designation in Korea as no special protection measures would mean that both the US and China would most highly benefit from such sudden lack of import tariff provisions. However Alvaro Durand-Morat and Eric J. Wales in “Sensitive Product Designation in the Doha Round: The Case of Rice” (2006) describe minimal impacts on importer considerations in Korea with or without special designation scenarios especially because rice production in India, and the US does not include many Korean varieties as of yet. However volume imports would increase demand for US and Chinese exporters in rice derivative products here or anything which is not arriving at table in a rice bowl. It would not appear an excessive conclusion that designating particular strains of Korean rice unique to the Korean palate as sensitive rather than the entire panoply of rices of the world and their derivative rice products might be a more sensible scenario as Koreans do not appear to grow many or any of them. Otherwise the mighty manioc might actually be set loose on the local competition.

What I would really like to see is the simple ability to purchase a single mackerel out of a little basket at the local 10 day market rather than the two at a set minimum price. Sadly fish are not agricultural products.

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