|Maine lobster has seen a surge in popularity in South Korea since the signing of the KORUS FTA. Image: Flickr user Frank Gruber|
The South Korea-US Free Trade Agreement (KORUS FTA) has helped Maine lobster sales to soar in supermarkets in South Korea. Since the FTA was implemented in 2012, the 20% base tariff on marine products from the US has steadily declined, and will eventually reach 0% in 2016. The tariff reduction opened a window of opportunity for Maine to export marine products to South Korea. Compared to 2011, the value of exports on all marine products increased by more than 1000% by 2013.
Within the broader category of marine products, South Korean imports of US lobsters have increased especially dramatically. Korea imported $771,000 of lobsters from the US in 2011, but that number went up by about 20 times, reaching almost $16 million in 2013. The state of Maine was the driving force behind the surge. For the years of 2011, 2012 and 2013, Maine harvested more than 100 million pounds of lobster each year, driving world lobster prices down continuously. Accordingly, American lobsters became more competitive in the world market, especially in South Korea with the tariff reduction. Towards the end of 2013, the price of American lobster in South Korea went down to about $9 per pound—half the price of Canadian lobsters, which are subject to a 20% tariff.
Maine also made good efforts to promote its lobsters in South Korea. Last June, top hotel chefs of South Korea were invited to explore the process of catching and shipping Maine lobsters. Lobster exporters also made deals with giant supermarkets in South Korea in order to provide fresh Maine lobsters in large quantities at cheaper prices. The shipping process starts with hibernating lobsters by immersing them in cold sea water. Then, the sleeping lobsters are individually packed in sectioned boxes. Within 48 hours, they find themselves swimming in the tanks of local supermarkets in South Korea.
The journey of American lobster tells more than a mere outcome of tariff reductions. The rate of reduction from 2012 to 2013 was only 4%, yet the price of American lobster in South Korea dropped by half and the consumption more than doubled. By the end of 2013, South Korea was consuming about 30% of all the lobsters caught in the US—greater than even US domestic consumption.
Hyung Ki (John) Kim is a research intern at East-West Center in Washington.