The agricultural and livestock product sector in our country is 99.7% open. Only 0.3%, or about 10 items, are reserved. We have always claimed this, and the U.S. side also significantly agreed, allowing us to reach a deal that was not particularly problematic.
The U.S.-Korea Free Trade Agreement (FTA) has opened 99.7% of our agricultural product market, which is nearly perfect in level.
High-ranking officials from the Lee Jae-myung government consistently argued during negotiations with the U.S. that 99.7% of U.S. agricultural products were already open, explaining that this is why they could not open agricultural and livestock products to the U.S., but this figure was confirmed to be incorrect on the 4th.
It is unclear whether they provided incorrect figures during negotiations or miscommunicated domestically, but since there are discrepancies between South Korean and U.S. government officials regarding rice market openness, it seems likely to become a contentious issue in the future.
So what is the truth of the 99.7% openness that the officials mention? Here's a Q&A format breakdown.
Q. What does openness mean in trade?
In trade, market openness refers to the elimination of tariffs. While the current tariff rate is not '0', items that have agreed to eliminate tariffs within a certain period under mutual agreement are also considered open. Conversely, items subject to 'tariff-rate quotas' (TRQ) that adjust tariffs based on quantity or timing to protect domestic products, or items for which tariff elimination is not permitted, are referred to as not open.
Q. What is the openness rate, and how is it calculated?
It refers to the proportion of items from a specific country that have had tariffs eliminated or are scheduled for elimination. An openness rate of 99.7% means that out of 1,000 products exported from the U.S. to Korea, 997 either have no tariffs or are slated for elimination. The classification of products is based on 'HS codes.'
Q. Is the market openness rate for U.S. agricultural products indeed 99.7%?
No. There are currently a total of 1,591 types of U.S. agricultural and livestock products entering Korea (based on HS codes). Of these, 35 items are subject to TRQs or are non-permitted items. The percentage of items that are not open is 2.2%. Therefore, the accuracy of the agricultural and livestock product market openness rate is 97.8%, calculated as 100% minus 2.2%.
Q. What are the 35 items that are not open?
First, there are 19 items subject to TRQs. Among these, 11 are dairy products like milk and cream, 5 are soybean (oil) items, and there is 1 item each for honey, potatoes, and oranges. Since items are classified according to HS codes, there may be multiple products even if they belong to the same category.
For potatoes, a total TRQ is implemented. Up to about 5,300 tons, there is no tariff, but exceeding this amount incurs a 304% tariff. For oranges, seasonal tariffs apply. For oranges imported from September to February, there are no tariffs up to 4,400 tons, but exceeding this incurs a 50% tariff. TRQs are only applied during the season when tangerines are marketed to protect farms producing citrus similar to oranges.
Honey has no tariffs up to 351 tons, but for quantities exceeding this, a tariff of 143% or 1,864 won per kg is applied. For soybeans, there is no tariff up to 41,300 tons, but amounts exceeding this are subject to a tariff rate of 487% or 956 won per kg.
There are 16 non-permitted items, all of which are rice related.
Q. How was the figure '99.7%' for agricultural market openness derived?
It is not the agricultural market openness rate but the overall market openness rate that is 99.7%. According to the relevant departments, the total number of items entering Korea from the U.S. is 11,293. Of these, only 35 agricultural and livestock items are not open. Therefore, calculating the openness rate based on this results in 99.7%.
Q. What does the 'about 10 items' mentioned by Deputy Minister Kim refer to?
It has not yet been confirmed. Officials from the Ministry of Agriculture, Food and Rural Affairs and the Ministry of Trade, Industry and Energy state that 'the number of 35 items is accurate.'
However, one official explained, "If categorized by item name rather than HS code, there are about 8 items, including rice, powdered milk, condensed milk, cream, potatoes, oranges, soybeans, and honey. Perhaps this is what was based on."
Q. Isn't the import of beef also restricted? Why is it not on the list of excluded items?
The tariffs on U.S. beef will be eliminated by 2026. This means it is considered an open item.
The current prohibition on importing U.S. beef over 30 months old is related to quarantine and is unrelated to market openness, according to the government's explanation.
Q. What about apples?
Currently, U.S. apples cannot be imported into Korea. However, this is due to quarantine and is unrelated to the openness rate.
The U.S. applied for apple quarantine in Korea back in 1993. Currently, the import quarantine process for U.S. apples is at step 2 out of 8, specifically "initiating the import risk analysis procedure."
In addition to apples, pears (step 3), plums (step 1), and pomegranates (step 1) are also undergoing quarantine processes.
Q. The U.S. referred to tariffs as 'reciprocal tariffs.' Does that mean we also impose a 15% tariff on U.S. products, just like the U.S. imposes a 15% tariff on Korean products?
No. The tariffs imposed when U.S. products are imported into Korea remain unchanged. The tariff rate for most items is 0%. In contrast, Korean products exported to the U.S. incur a tariff of 15% based on the export cost.
President Donald Trump announced plans for reciprocal tariffs, stating that if the counterpart raises tariffs, he will increase the reciprocal tariffs by that amount. This has drawn criticism as an act that ignores the principle of reciprocity in diplomacy and trade.
Q. The government cited an openness rate of 99.7% while the actual rate is 97.8%, which is less than a 2% point difference. Is this a significant issue?
First, accurate information must be provided to the citizens. It's also important not to give the other party leverage to disrupt negotiations. After all, the counterpart is Trump, who is shaking up the trade environment with 'America First' policies.
If President Trump were to say, 'You claimed that the agricultural market openness rate is 99.7%, but it turns out to be lower. Please adjust it to 99.7%,' how would we respond? To match this number, we would need to open 30 out of the 35 currently non-open items. It should be noted that each of these items directly relates to the survival of the domestic agricultural and livestock industry.