By on November 12, 2010

The rest of the world is busy tearing down tariff borders by entering free trade agreements, such as the one between South Korea an the EU. Japan doesn’t want to stand on the sidelines and is in FTA negotiations with the EU. At the same time, the U.S. and Korea yesterday shitcanned their free trade plans. The reason? Cars. Allegedly.

In a terse statement, Reuters says that disagreement over the access of U.S. carmakers to the lucrative South Korean automobile market was the main reason the two countries failed to advance a long-stalled free trade pact. At least that’s what U.S. officials say.

“Mike Froman, an economic adviser to President Barack Obama, told reporters that there were a number of other sticking points, but autos had been the main obstacle to a deal.”

Korea’s Chosun has a completely different version: Cars are welcome. Dead cows killed the deal.

“Additional talks over a Korea-U.S. free trade agreement fell apart due to American insistence that Korea open its market to more U.S. beef exports.”

The Chosun has more choice words:

“But some points need to be made about the attitude the U.S. negotiators have taken in the talks. Korea accepted most of the U.S. demands to ease environmental and safety regulations for automobiles. That alone is enough to draw criticism from the Korean public for yielding to U.S. pressure. It shows how strong Korea’s will was to finally get the FTA on the road. But Korean officials apparently made it clear several times to their U.S. counterparts that the beef issue has to stay off the table.

The U.S. government knows full well how badly Korea was disrupted by mass protests as a result of talks with Washington over the resumption of beef imports back in 2008. Insisting that Seoul fully open its market to U.S. beef is like pushing the Korean government to pour gasoline on a fire. Yet still U.S. trade officials brought up the beef issue at the last minute, saying that the deal requires the support of lawmakers representing beef producing states. The U.S. must have legitimate reasons to do so, but it shows a lack of consideration for the negotiating partner. “

Actually, the dealbreakers were old cows. Worried about mad cow disease, Korea doesn’t want beef from cattle older than 30 months. Heifers are welcome. U.S. officials have said that exports of beef from cattle over 30 months old would amount to only about 5 percent of total beef exports. But they insisted on blowing it nonetheless.

The Chosun’s sage advice: Politicians “need to think long and hard whether the issue of beef from cattle 30 months or older is worth jettisoning the entire Korea-U.S. FTA for.”

So while Korea and the EU will trade unencumbered, the U.S. and Korea can’t agree on old cows.

What’s more, the tiff is barely a day old, and it’s already fed to the American public that the bad Koreans continue to keep good American cars out of their protected market. Mad cows? Never heard of them.

Cows or cars? Believe who you want.

Get the latest TTAC e-Newsletter!

25 Comments on “Cars Collide With Mad Cows: U.S. Korean Trade Pact Chokes On Aged Beef...”

  • avatar

    “Cows or cars? Believe who you want.”

    What I believe is that the US government and its political bedfellows just happen to own a car company that is getting its ass kicked ever harder by the Korean automakers. After kneecapping Toyota, it’s time to do something about that, because GM will run out of gas when it runs out of ex-Chrysler customers looking for a made-in-Detroit car.

  • avatar

    This has nothing to do with mad cow disease, there hasn’t been a case of mad-cow in the last five years at least. Cows typically contract the disease through bone meal, which isn’t used here.
    Korean nationalists have latched on their public’s odd hysteria over mad-cow to use it as a smoke-screen for a larger anti-free-trade agenda. Think of it as a proxy war.
    The Obama administration understands the political games going on behind the beef ban, that’s why they were willing to scrap the whole trade agreement over what seems like semantics. Political pressure from beef growing states had nothing to do with it, since the Korean market isn’t really that valuable to begin with.
    This is about Korea saying to the U.S. “we will ban any import we choose to for even the flimsiest of reasons, and we will export as many cars to you as we like”.
    No Deal.

    • 0 avatar


    • 0 avatar

      I agree with Joe, the Koreans are playing the American farmer hand to trump other trade concessions, especially in autos.

      Though “not polished”, it is better that our present administration is more engaged in trade and currencies issues than in the past.   It took the US getting knocked off it’s global pedestal to see that the world’s export machine used us as a patsy.
      While Asia is busy telling the US to get used to their emerging economic power, they may be blinded by their past success and not adapt to a new model of stronger Asian currencies and two way trade deals. 

    • 0 avatar

      So how does that work then? Koreans want a ban on old cows which amount to 5% and the US says no, you have to take it… and the Koreans are totally to blame? After agreeing to watered down environmental regs already?
      Maybe the US should have just not talked about beef at all in a deal about cars. You can guess what you want about what is happening behind the scene, but frankly Korea has more to gain than the US in lowered car tariffs.

    • 0 avatar

      Hmmm, let’s see.

      SKorea traditionally had been the 3rd largest export market for US beef (prior to the BSE scare).

      Thus far in 2010, SKorea is…     the 3rd largest importer of US beef (even surpassing Japan for the 1st time to become the largest market for US beef in Asia).

      Many other countries also have the 30  month age cut-off for US beef and Japan’s requirement is significantly more stringent – US beef has to be from cattle under 21 months of age (also, spinal cords, vertebrae, brains and bone marrow must be removed).

      And let’s not forget the protracted legal battle in the US over live cattle imports from Canada over 30  months of age (funny how the US cattle industry is fighting exports of live cattle from Canada over 30 months while putting heavy pressure on the Feds to get SKorea to give up the 30 month requirement; using the SKorean market as the starting point in order to get other markets to drop similar age requirements).

  • avatar

    All I can say is that U.S. diplomacy lacks a little polish.

    • 0 avatar

      My thoughts exactly. US trade negotiators tend to be idiots. I lived and worked in Japan for nine years. As a member of the American Chamber of Commerce in Japan, I had to work with those clowns from time to time. I was not impressed. Looks like their tactics have not changed.

  • avatar

    Hmm…Let’s see…a couple of foreign car companies can sell cars in this county…can open factories fairly recently in this country…I wonder who these companies are?
    But show up at the Korean shores with some American automobiles and the gates are closed?
    Sounds like free trade to me.  Not.
    (“I wonder who these companies are?  Hyundai and Kia)

    I know about these “free trade” operations. In the 70’s and 80’s the Japanese were “free” to sell TVs in the US. But none of the American TV manufacturers were “free” to sell in Japan. A strange definition of “free”.

    • 0 avatar
      Brian P

      I doubt if it is really that the gates are “closed”. It’s probably really more that while the Korean companies are manufacturing something that at least some Americans want, the reverse is not true. Keep in mind that former Daewoo = GM.
      There are differences in the technical regulations … but a good many other manufacturers build vehicles to two different sets of standards (pretty much US and “everywhere else”). Question 1: why can’t the Americans (answer: they already do), question 2: since the USA is the last man standing in terms of motor vehicle standards significantly differing from UNECE, the real solution to that one is for the USA to give up the “not invented here” syndrome and accept the UNECE standards …

  • avatar

    I say keep the beef.
    It’s getting expensive anywho.
    And beef production cost a lot, environmentally speaking.

    Can we give them teachers?
    Or lawyers?

  • avatar

    Its about time somebody started playing hard ball with the Koreans.

     God Bless America

  • avatar

    Christ, people, this really shouldn’t be an issue.  We know that CJD and Mad Cow are caused by prions.  We know that prion-based diseases come from eating neural matter.  We know that American (and Canadian, and many other) farmers use animal feed derived from animals that isn’t exactly processed with precision.
    The answer?  Stop feeding animals to other animals.  I know it might, perish the thought, cost a little more, but try feeding them, oh, foods that they’re set up to eat like, eg, grasses and poof, watch the problem go away.
    Do this and you might actually be able to sell beef (and cars) to Korea, which would more than offset the cost savings from feeding ground-up brains and spinal cords to cattle.

    • 0 avatar

      I think CNS parts in feed may have been outlawed for awhile, but the bit about imperfect processing is probably true.
      Also, stupid greedy ranchers are still sneaking the odd “downer cow” into the slaughterhouse because they don’t want to lose the $ and are too ignorant to know that ataxia is one of the big hallmarks of a CJD.

      Or they’re willfully ignoring the common sense that you don’t give sick food to people.

    • 0 avatar

      Agreed, but banning imports of, say, organic or small farm beef would eliminate this concern.  The Koreans are saying no beef imports, full stop.
      The Koreans’ position doesn’t stink, but it definitely smells.

    • 0 avatar

      SKorea is just saying keep the 30 month age requirement which many other countries also have and which is less stringent than Japan’s under 21 months age requirement.

      For 2010 YTD, SKorea is the 3rd largest export market for US beef which is where it was before the BSE scare.

  • avatar

    There are many varieties of US beef: from purely grass or corn fed to Kobe-based Wagyu, surely there is a type the South Koreans would accept.

  • avatar

    Reading between the lines, my guess is that cars were indeed the issue. The Koreans did not want to give up on cars, so they found another reason to kill the agreement.
    The Korean negotiators just happened to choose cows. Their arguments seem strained. It seems apparent that they have no real beef about beef.
    But raising that issue gets them off the subject they really care about — cars.

  • avatar

    BD2 – as far as I know Canada still uses bone meal. Bone meal spreads BSE.

  • avatar
    George B

    So are the old cows worn out dairy cows that are converted to hamburger?  Normally you try to turn beef cattle into meat in as short a time as possible.
    Sad to see this trade agreement blow up.  The Koreans have come a long way in making cars and consumer electronics products that I would want to buy.

Read all comments

Recent Comments

  • Art Vandelay: “…the corners are cut where you cannot see them.” Yeah, like inside of the engine...
  • Art Vandelay: I had to jump through enough hoops to try and use that warranty the one time that I really needed it...
  • JMII: Yep with Ranger being up-sized and the Maverick being right-sized something had to give.
  • TheEndlessEnigma: “I find it curious that competitors *refure* to offer such a warranty.” Mitsubishi...
  • ajla: YMMV, but the quality on my Stinger has been fine over 4 years. My biggest complaint is that the brake...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Jo Borras
  • Mark Baruth
  • Ronnie Schreiber