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The Fiasco That Is The South Korean Agreement

No, I'm not talking about world events in geopolitics, I'm talking about the global fiasco influencing the U.S. cattle industry -- the re-establishment of trade after BSE.

Our desperation to reopen Japan was understandable. The U.S. acceptance of the non-scientific 20-month age requirement reflected an understanding that Japan's political situation was unique. Its government having failed to enact the same safeguards as the rest of the world following the discovery of BSE, Japanese consumer confidence was destroyed when BSE was found in Japan in fall 2001. In the aftermath, Japan's government adopted extremist standards trying to recover consumer confidence. Those standards were in place long before the U.S. found its first case of BSE in December 2003.

Eventually, Japan will move toward the acceptance of valid scientific standards. This breach was pragmatic and reflective of political realities in Japan; it's also an exception and not a rule, so to speak.

Korea, however, is an unmitigated disaster. From the beginning, Korea made it clear that, while they wouldn't openly flout international standards, they would appease internal interests by restricting access to their markets as long as possible. First, they did this with delaying tactics, then by creating artificial trade barriers via rule interpretation, which obliterated the spirit of the agreements without clearly running contrary to the letter of the law.

Creekstone did what none of the major packers would do -- attempted a shipment to South Korea under the agreement that had been reached. As feared, they were rewarded with a major financial hit when a single small piece of gristle was found in a nine-ton shipment the South Korean government had sat on for nearly a month.

The message was sent loud and clear - the South Korean market is technically open but fundamentally it's closed tight to U.S. beef.

While it's Korea that's kept its market closed, the biggest share of the blame falls directly on U.S. shoulders. Everyone knew the score when the deal was inked; Korea just lived up to its end of the deal.

The deal simply was never a tenable proposition, and U.S. attempts to renegotiate it are casting us in a poor light with the Korean consumer -- just as Korea had planned. No deal is better than a deal that you can't live up to, and have to come back begging for concessions, too.

The Korean situation must be remedied quickly. Otherwise, instead of an exception, we'll have shown the world that non-tariff trade barriers are very much in play -- they just require more nuance than in the past.

Nobody can argue in good conscience that the U.S. beef industry doesn't need the global beef market. But, at the same time, nobody can argue that if we allow it to be established without guidelines and fairness, it can be viable either. It may be a reach to say the future of the beef business rests on how this issue is resolved and how quickly, but not as much of a reach as one might think.
-- Troy Marshall