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Overview of Korea’s development experience

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Uruguay Round Agriculture Agreement

The Uruguay Round Agreement on Agriculture (URAA) can be regarded as the most effective multilateral trade pact in history in that it converted quantitative restrictions to a system based on tariffs, which would then be reduced in phases. It also harmonized domestic subsidies with international rules on their use for the first time.

Korea agreed to the elimination of non-tariff barriers and the market liberalization of all agricultural commodities with the exception of rice. Tariffs and newly established tariff-equivalents were to be reduced by 27 percent on average over 10 years. Under its market access commitments, Korea began to phase out non-tariff import restrictions on agricultural products in January 1995. Tariff rate quotas were established for anumber of former import-restricted agricultural products, including many horticultural products. The remaining phase of the BOP liberalization, somewhat modified by the URAA, was completed on schedule by January 1, 2001.

As for beef, the import quota was maintained until 2000 and was completely liberalized in 2001 with a tariff rate of 41.2 percent. Before then, Korea’s beef import regime followed the rules negotiated under the auspices of the GATT in agreements reached with the United States and other trading partners in 1989 and 1993 before the URAA. As a result, Korea’s agricultural import liberalization rate increased sharply to 99 percent in 2008 from 80 percent in 1990.


Table 4-13. Agricultural import liberalization rate


The value of agricultural production was still rising in 1995 and 1996, but the growth rate slowed after 1994. The “farm gate” price index for rice and grains increased rapidly in 1995 and 1996. During the same period, the “farm gate” price index for fruits began falling, while that for vegetables and livestock products rose marginally. Agricultural imports increased markedly in 1995, but the growth rate slowed in 1996. Agricultural exports showed a similar trend. Accordingly, the increase in net imports can be one reason for the slowing growth of agricultural prices in 1996.

Total acreage declined steadily, although the rate of decrease leveled off after 1995. Rice acreage decreased only marginally in 1996. The acreage of barley, fruits and vegetables increased. In conclusion, the rise in the value of agricultural production was caused by an increase in prices of those products rather than by an increase in the size of agricultural output. The price of agricultural products continued to increase due to strong consumer demand and rising incomes, even with the growth of agricultural imports. Therefore, the adverse effects of market opening through the implementation of URAA can be said to be minimal.


Table 4-14. Changes in major indicators of agriculture in Korea


Source : SaKong, Il and Koh, Youngsun, 2010. The Korean Economy Six Decades of Growth and Development. Seoul: Korea Development Institute.