The Korean Quotient: Hedging Bets in Asia

With just 22 percent of its topography composed of arable land, South Korea is a nation of hills and mountains. Island nations and nations with little arable land must often balance between domestic production and international imports to feed its citizens and maintain prudent import/export levels. While rice is the Republic of South Korea’s (ROK) most detrimental crop, comprising 90 percent of the nation’s grain output, it also produces wheat, barley, soybean and potatoes.

Nevertheless it is the sixth largest importer of U.S. Agricultural products, amounting to nearly 7 billion in volume in 2017. Currently the U.S. Has a 6.3 billion dollar trade surplus with South Korea most specifically in the area of agriculture and food products, according to the Congressional Research Service. With the current trade war between the U.S. and China, South Korea has become a vital link for American farmers and food producers, according to data from a release by the ROK Ministry of Foreign Affairs. This free-trade relationship has been facilitated by the little known KORUS (US.-South Korea Free Trade Agreement) trade agreement which took affect in 2012. The corollary of the KORUS agreement was signed by the U.S. president in September of 2018. The bilateral KORUS trade agreement which took place in more harmonious times with U.S.-Asian partners, has facilitated an enormous growth in profit for the US. Without the provision & cooperation, it remains unclear as to how well the U.S. Would fair during its trade war with China.

The pivotal trade relationship that the U.S. holds with Korea is paramount. It is clear that with the current favorable U.S. Trade surplus with Korea, Washington will want to ensure that US-Korea relations remain a well-oiled machine. In October alone Korean officials met or consulted with U.S. Officials or agencies for diplomatic, military or trade talks more than 5 times. Ironically, Asia (China, Japan and Korea) has been the major importer of U.S. Agricultural products. Japan imports 11.9 billion in U.S. Agricultural products, which is more agricultural than the entire European Union (11.5 billion). It is also important to note that both Canada and Mexico are top importers of U.S. Agriculture and food products occupying first and third place respectively. Undoubtedly, Korea (and Japan) is a key market for the US to hedge its bets while it wages its trade war again Asia’s most solid bilateral trade partner.

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