The Madeleine Brand Show for March 26, 2012

What the Korean free trade agreement means for California

The California Raisins

Richard Elzey/Flickr/Creative Commons

The California Raisins band that promoted raisins in the 1980s. A live version of the band is now touring South Korea to promote raisins, which are primed to do well under the new US-Korea Trade Agreement.

On President Barack Obama's second day of his trip to South Korea, he is meeting with world leaders to discuss the spread of nuclear weapons. After visiting the demilitarized zone that separates North and South Korea on Sunday, he told an audience in Seoul that it is only a matter of time before the two nations reunite.

The president's visit also coincided with the enactment of a free trade agreement with South Korea that took effect earlier this month. Called the Korean-United States Free Trade Agreement, it is the biggest trade accord in almost two decades.

Central to the agreement is a reduction in tariffs, the taxes exacted on imports and exports. The agreement will eliminate about 95 percent of those fees on numerous products, such as produce, electronics, machinery, and financial services.

While the fees will be phased out over the next few years, there are some benefits that California companies can take advantage of right away. One industry immediately benefiting will be agriculture, as fees have been eliminated on certain foods like pistachios, almonds, and raisins.

Raisins are expected to do especially well. Larry Blagg, who works with the Raisin Administrative Committee promoting the raisin market, says Koreans have truly embraced the snack in the past decade.

"Well, yes they do like raisins. Let me start with that. So we have been selling between eight and nine million pounds of raisins a year from California to Korea. Of the raisins that are consumed there – most of it goes to the baking industry."

The raisin market is so ripe that the California Raisins, the band of "raisins" that played "Heard it Through the Grapevine" in 1980s commercials, have been touring schools in Korea to promote the product.

Another product expected to do well under the new trade agreement is wine. Last year, Korea bought $11 million worth of California wine. But with the 15 percent tariff now removed, California wine should become cheaper in South Korea.

According to Linsey Gallagher with the Wine Institute, one California varietal in particular pairs well with Korean cuisine.

"They do eat a lot of beef in Korea. And the beef and spice dishes are a great pairing with Californian Zinfandel. It tends to be a bigger, bolder flavor and profile of wine. And it is a really nice match with many of the Korean beef dishes. So we have had a lot of success with the California Zinfandel, for example."

Gallagher expects wine exports to Korea to jump 25 percent over the next few years.

While wine and raisins are expected to do well, there are critical voices who argue that Korea may be able to produce goods more cheaply than here in the U.S., which means Korea can sell those goods a lower cost. These critics say that will causing American manufacturers to lose revenue and cut jobs.

Here in California, the California Labor Federation, the International Longshore and Warehouse Union and the California Fair Trade Coalition all spoke out against the deal.

Tim Robertson of the Fair Trade Coalition opposed the agreement saying, "The big loss here is the manufacturing sector. There are over 459,000 jobs in these sectors in California, and they are all put at risk under the Korea Free Trade Agreement."

Robertson predicts electronic manufacturers here in California will take the brunt of those job losses.


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