Voluntarily Restriction Could Be Key to U.S. Beef Impasse

In an attempt to resolve mounting controversy over resumption of U.S. beef imports, domestic beef importers have offered to voluntarily restrict shipment of U.S. beef from cattle older than 30 months.

The government said that if U.S. meat exporters announce their voluntary regulation over the shipment of beef, it would consider the announcement of a reply from the United States to its request for banning imports of U.S. beef from cattle older than 30 months.

Growing attention has been on the determination of private enterprises both at home and in the United States to provide a breakthrough in the impasse over the resumption of U.S. beef imports.

However, many have voiced caution about the “voluntary regulations” between the two countries’ businesses, saying that even if the move was accomplished it still remains to be seen whether it is legally binding.

○ Domestic meat importers not to import beef from cattle over 30 months old

The provisionally named Korea Meat Importers Association, which represents domestic beef importers, has decided not to import U.S. beef from cattle older than 30 months and is expected to announce their resolution soon.

However, the resolution has no legal or binding effects given that it is just a recommendation of the association. Moreover, the import business is a return system rather than a licensing system, which means no punitive measures would be available when a new importer doesn’t follow the recommendation.

A source of the association said, “Most of the beef imports from the United States will be between 24-25 month old cattle and import businesses are likely to favor the beef from 30 month old cattle. We are now reviewing a proposal to call on the government to change the system from the current return system to a licensing system.”

Meanwhile, major U.S. meat producers released a joint statement on Monday (local time), saying, “We have decided to label beef bound for Korea with cattle`s age to allay the concerns of Korean consumers.” This means they would allow Korean consumers to exercise their right to purchase U.S. beef.

Considering this decision was made even before the Korean government had made the request, it is likely that U.S. beef exporters will put a voluntary restriction on exporting beef from cattle over 30 months old in an effort to open the Korean market for U.S. beef.

This decision on the part of major U.S. meat producers shows that they cannot overlook the Korean market. In fact, since the Korean government unveiled that it would request a ban on beef from U.S. cattle older than 30 months, U.S. beef prices have plummeted.

According to the Chicago Mercantile Exchange (CME) on Tuesday, future prices of U.S. beef contracts expiring in August 2008 began trading at 1.0035 dollar per pound, 0.5 percent down from the day before. It was the lowest price ever recorded in the week.

Prior to this, rumors began circulating that Korea would resume U.S. beef imports in early April. This resulted in a surge in U.S. beef prices, showing the influence of the Korean market on U.S. beef exporters. For example, about 20 percent of beef was exported to Korea out of 1.27 million tons of beef that the United States had exported worldwide in 2003, a year prior to the mad cow disease outbreak in the United States.

○ Gov`t focuses on age limitation of U.S. beef imports

The government has been paying keen attention to the movement of U.S. meat exporters. Making sure to ban beef from U.S. cattle older than 30 months is the best policy the government can come up with to ease public anxiety. Given the attitude of the U.S. government, however, chances are remote that renegotiations will take place.

U.S. Ambassador to Korea Alexander Vershbow on Tuesday said that there has been no need for a renegotiation, hinting that it would be difficult to win active coordination from the United States.

Agriculture Minister Chung Woon-chun said Wednesday that, “Considering the public has worried about U.S. beef imports from cattle older than 30 months, the most important thing is to prevent this kind of beef from entering the market.” He added, “The formality doesn’t matter, whether it is a renegotiation or a voluntary export regulation.” His remarks indicate that the government has placed its expectation and hope on “voluntary restrictions” from the private sector.

Chung also said the resolution, not just from the U.S. government but also from private meat producers in the United States, can be considered a reply to the request for banning beef on over 30 months old cattle. This means that if U.S. meat exporters announce their determination, Korea would notify new terms of sanitary conditions and resume quarantine inspections of U.S. beef.

A high-ranking government official said, “The role of the bilateral governments is to help U.S. meat producers agree not to export beef from cattle over 30 months old. Since the situation facing the Korean government doesn’t look good, the U.S. government is expected to show its good faith.”

Another government source said, “Without the ‘tacit consent’ of the U.S. government, it is hard for meat producers to resolve to ban beef from over 30 month old cattle. Given this, we should regard their voluntary resolution as the will of the U.S. government to resolve this stalemate.”

Vershbow also said yesterday, “Without having another negotiation, the Korean people can earn enough for what they want,” hinting at the possibility of voluntary restriction to break the deadlock.

However, controversy is likely to linger over whether the restrictions from the private sector would have legal binding and how long the regulations would last.

It remains to be seen whether the voluntary export restriction would exceed 120 days because major U.S. meat producers set that period for age limitation labeling. However, the Korean government hopes the United States offers voluntary restriction until at least April of next year when the government places stricter rules on animal feed.

swon@donga.com savoring@donga.com