OFFICE OF THE UNITED STATES

TRADE REPRESENTATIVE

Executive Office of the President

Washington, D.C.

20508

FOR IMMEDIATE RELEASE

Thursday, July 20, 1995

95-53

Contact: Anne Luzzatto

Dianne Wildman

Kirsten Powers

Jamal Simmons

(202) 395-3230

Statement by Ambassador Kantor

Ambassador Mickey Kantor announced today that U.S. efforts to open the South Korean market to U. S. meat and other food products has resulted in a successful agreement between the United States and the Korean governments.

USTR Kantor said, "We have enjoyed strong support from our industry and our Congress for working within the WTO to resolve this dispute -- and our two governments have demonstrated that, using the tools of the WTO, we can achieve a mutually acceptable result."

"The importance of this agreement to the tens of thousands of American workers in our beef and pork industries across all 50 states is manifest. Korea is the fourth largest market in the world for our agricultural exports, and the third largest market for our beef."

The dispute, which arose in early 1994, concerned Korea's govemment-mandated shelf-life standards which adversely affect a range of U.S. food exports, such as vacuum-packed beef and pork, frozen patties and sausages, poultry, and other products.

Last month, Korean authorities met with the United States in Geneva to explain Korea's laws and regulations concerning the shelf-life of food products. Those discussions contributed to the final settlement, which will be forwarded to the Chairman of the Dispute Settlement Body in Geneva today.

Korea agreed to phase-out its current system and, similar to most other countries, allow manufacturers to set their own "use-by" dates. For chilled, vacuum-packed pork and beef and all frozen food, including beef, pork and poultry, Korea's new system will come into effect on July 1, 1996. For all dried, packaged, canned or bottled products, the manufacturer's use-by system will go into effect on October I of this year.

In the interim, Korea has established specific government mandated shelf-life dates that will allow trade to take place until the new system takes effect. The settlement also covers other concerns raised by the U.S. meat industry, including pork tendering procedures.

As a result of this settlement, the United States Government is terminating the investigation of the Korean restrictions affecting U.S. meat imports under Section 301 of the Trade act of 1974. In addition, both sides agreed to begin work immediately on drafting a joint letter to the WTO Dispute Settlement Body, aimed at resolving another case regarding Korea's residue testing and inspection of imported agricultural products.

BACKGROUND

Unscientific sanitary regulations are commonly employed to keep out imports, particularly agricultural products. In February of 1994, Korean authorities suddenly seized a shipment of American sausages because they had been "wrongly classified" by customs officials over the past four years as products with a 90-day shelf-life expiration period. Under the "coffect" classification, Korean authorities said, the sausages would have been allowed only a 30-day expiration period -- roughly the time it would take for the sausages to clear port.

Korea ultimately reversed itself on this particular product, but not until the U.S. meat industry filed a Section 301 petition.

In November of 1994, the United States Trade Representative accepted a Section 301 petition filed by the U.S. meat industry (The National Cattleman's Association, The National Pork Producers' Council, The American Meat Institute), which asserted that Korea restricts U.S. meat imports and abrogates three bilateral agreements. The Petitioners argued that the market could be even more significant if trade restrictions were eliminated. For example, Koreans consume four times as much beef as the Japanese on a per capita basis. Trade damages estimates range from $240 million for 1994 to as much as $1 billion annually by 1999.

In its investigation, the USTR found that Korean shelf-life standards are not supported by scientific studies, and are applied in an arbitrary and discriminatory manner. Most countries in the world, including member nations of the European Union and APEC, rely on manufacturer determined "use-by" dates to control food safety and quality.

After bilateral consultations broke down at the end of April, the United States requested WTO Article XXII Consultations on May 3, 1995. Canada joined the consultations, which were held in Geneva on June 5 and 6. Australia and New Zealand also expressed interest in the case.