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Wednesday, 25 January 2012 10:50

South Korea market coming back to beef producers

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By Jamie Woodford
South Korea is the only major Asian market with a ban on Canadian beef, and while plans are in the works to resume imports after an eight-year hiatus, the Canadian Cattlemen’s Association (CCA) isn’t holding its breath.

“We’re close,” said John Masswohl, director of government and international relations for the CCA. “We’re not quite over the goal line yet. I guess we won’t be celebrating until we know for sure that that happens.”

South Korea banned imports of Canadian beef and beef products in May 2003 following the country’s first case of mad cow disease.

After years of emphasizing there is no scientific basis for the ban, Canada requested a World Trade Organization panel to review South Korea’s ban on Canadian beef.

Last June, Ottawa and Seoul agreed on a process to restore access by the end of 2011.

“We had reached an agreement ... that South Korea would be open to Canadian beef, and it would be access (for beef) under 30 months (of age), and we would have that by end of December 2011. In return, Canada agreed to suspend its WTO dispute panel against South Korea,” he said.

Now, weeks after the agreed date to open the market, Canada is awaiting the official green light.

Masswohl explained there’s still some paperwork to do before that happens.

After ratification of the import health requirements, the South Korean government still has to promulgate the IHRs, then issue a list of approved beef establishments for export and formally accept the import health certificates.

“They didn’t quite make Dec. 31, so I guess we’re a little bit disappointed about that, but the biggest step in all that was that they had to get it approved by their legislature, and they did that on Dec. 30 and now there’s a couple of administrative steps they have to do,” he said. “We’re optimistic that they’ll get that done soon. We hoped that they would have had it done already.”

He added should the deal drag on longer than necessary, Canada has the option to ask the WTO to resume the dispute.

“We want to be positive right now, but if it doesn’t turn out to be positive, we have mechanisms and we are certainly letting the South Koreans know that those mechanisms exist.”

Masswohl said it’s frustrating South Korea is taking so long to open its doors when other Asian countries have already done so.

“Certainly in countries like Taiwan, Japan and China we have objectives to expand the access that we have, but at least we have something. South Korea is really the last hold out,” he said, adding South Korea was the forth largest export market in 2002. “They took somewhere around $60 million worth of beef.”

Due to the ban, it’s not likely Canada will earn that amount right off the bat. Initial estimates from Canada Beef Inc., the marketing division of the Canadian Cattlemen’s Association, come in around half that at $30 million.

Masswohl said the reduction has partly to do with the limited supply of cattle, but a bigger factor is the the U.S.’s free trade agreement (FTA) with South Korea, which is expected to come into effect sometime this year.

Prior to the mad cow outbreak, Canada was also negotiating a free trade agreement

“If we just get that finished off and get a Canada-Korea agreement implemented as well, I think what you would see is Canada beef would revise their forecast upward,” he said.

Until then, Canada will be shipping beef into South Korea at a 40 per cent tariff, while the U.S. will get a one-fifteenth reduction on that tariff every year.

“So Canadian beef will be 40 per cent in the first year the United States beef will be somewhere around 37.5 per cent tariff. Then, if we go a second year without having a Canada FTA, the Americans will be down to 35 per cent while we’re still at 40,” Masswohl explained.

A little closer to home, re-opening the South Korean market will mean more business for southern Alberta producers.

“The way I look at this is, for every pound of beef sold outside of the Canadian borders ... 70 per cent of that pound has something to do with Alberta,” said Bob Lowe, Zone 2 director for the Alberta Beef Producers.

“They’re estimating it’ll add about $35 million to the Canadian beef industry ... so if you consider that Alberta has 40 per cent of the cows or feeds, 60 per cent of the fat cattle, the cattle on feed, or 75 to 80 per cent of the killed cattle — take $35 million times any one of those percentages that you want and that’s basically how it would effect Alberta,” he said.

“The cattle feeding industry is centralized in Picture Butte, so it’s a significant number.”

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