USTR: Korea Free Trade Agreement Effective March 15
American Whiskey Poised for Strong Growth with Tariffs Eliminated on American Whiskey Imports
WASHINGTON, DC – The Distilled Spirits Council today welcomed an announcement by the Office of the U.S. Trade Representative (USTR) that the Korea Free Trade Agreement (KORUS FTA) will enter into force officially on March 15, 2012, resulting in an immediate elimination of the 20% tariff on Bourbon and Tennessee Whiskey imports and a gradual, five-year elimination of tariffs on other U.S. spirits products.
Further, South Korea will recognize Bourbon and Tennessee Whiskey as distinctive products of the U.S., joining many other countries around the globe. This will ensure that only products made in the U.S. according to rigorous standards may be sold as Bourbon or Tennessee Whiskey in Korea.
Bourbon and Tennessee Whiskey accounted for 74% of the $8.3 million in U.S. spirits exports to Korea in 2011. According to Euromonitor, the South Korean whiskey market was valued at $3.89 billion (retail) in 2011, making it the world’s sixth largest whiskey market by value. Currently, U.S. whiskeys only account for 1.6% of that total.
“The Korea FTA represents an extraordinary growth opportunity for U.S. spirits exporters,” said DISCUS President and CEO Peter Cressy, “and particularly for Bourbon and Tennessee Whiskey producers. Korea is the sixth largest whiskey-drinking country in the world, and this agreement will significantly level the playing field for U.S. producers.”
Cressy added, “The U.S. distilled spirits industry is extremely grateful to USTR staff for their tireless efforts to negotiate and implement this important agreement, which will facilitate significant growth in U.S. spirits exports to Korea and thus support U.S. jobs.”
In addition to the benefits for American Whiskey, Korea has also agreed to eliminate the 15% tariff on grape brandy and 20% tariff on all other U.S. spirits over a five-year period.
The Distilled Spirits Council plans to conduct another round of promotional activities in Korea this spring to educate Korean importers and media about the distinctiveness and versatility of American whiskeys and other spirits.
Free trade agreements and other initiatives to reduce trade barriers have contributed greatly to the U.S. spirits industry’s growth in export markets. Full-year export data released last week by the U.S. International Trade Commission confirmed that 2011 was another record-breaking year for U.S. distilled spirits exports; exports of these products reached $1.34 billion, representing a 15.7% increase over 2010.