The Korea Trade Commission (KTC) has dismissed fears for the future of South Korean pork processing after an indigenous company blamed falling sales on cheap European imports following a free trade agreement (FTA) with the European Union (EU).
The unnamed company in question saw sales nosedive 30% year-on-year in the first half of 2012. Yi Heon-du, a deputy director at the KTC, said that, to avoid embarrassment, the firm had asked the Commission not to release more information.
The FTA so far appears to have led to one-way traffic in the EU’s favour. In the first nine months since the agreement came into effect on 1 July 2011, South Korea’s imports of EU pork surged nearly 120%, generating new trade valued at some €200m (US$251.8m), according to the European Commission.
As for South Korean exports of pork to the EU, “there have been none since the trade agreement came into effect,” according to Lee Byoung-guan, an official at the country’s quarantine service.
The KTC has indeed acknowledged that the FTA was partly to blame for the unnamed company’s misfortune and has awarded damages to be paid by the government-funded Small & Medium Business Corporation (SBC). This support includes loans with a low interest of 3.11%, along with financial support of up to 80% on fees paid to consulting companies for counselling on restructuring.
The KTC’s Yi Heon-du said SBC has funds to pay out such damages to four or five companies annually. However, he insisted that the South Korean pork industry remains robust despite greater imports from the EU.
“The [complainant] company has only five employees, with sales representing practically 0% of the local pork sector’s sales – it is so tiny, that any losses it has suffered cannot impact the pork sector here,” Yi told GlobalMeatNews.
The complaint would not lead to South Korea’s pork sector viewing the FTA negatively, Yi added, saying the deal with the EU offered the industry many export opportunities. EU pork still accounts for less than 6% of the South Korean market while domestic producers supply 85% of the market.