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June 11, 2007 - What is going on?

At best it is a fragile relationship, so what is going on and how could this happen? I’m asking these two questions about the latest mishap in our ongoing attempt to ship American beef into South Korea.

Once our third-largest foreign buyer of beef, South Korea stopped importing our beef after the discovery of Mad Cow Disease in 2003. Japan, our No. 1 beef buyer re-opened its market over a year ago, but South Korea refused until this spring, when U.S. trade officials said they would not approve a much-desired Free Trade Agreement until they started importing our beef again. So South Korean trade officials agreed to accept only boneless beef under 30 months of age.

There have been two bumps in the road since the opening...a few bone chips were found in an early shipment of beef, it was rejected and the border closed for a few weeks until the South Korean government again got the word and understood...no U.S. beef, no U.S.-South Korea Free Trade Agreement.

But the second bump earlier this month is our fault and in my opinion, inexcusable. Two shipments of U.S. beef, one processed by Tyson, the other by Cargill, arrived at a South Korean port without proper export documentation and were rejected. Fingers were immediately pointed at the two processors, but both companies said the 66.4 tons had been processed by them, but for domestic consumption only in the U.S. and they had no idea how the beef made its way to South Korea.

A spokesman for Cargill said “Cargill was not the exporter of the product and it was not produced by Cargill for export. A customer bought product from us that was clearly defined as being for domestic use only.” A Tyson spokesman said the same and U.S. officials finally traced the export sales to a West Coast company, Am-Mex International.

So, back to my original questions, why didn’t this company know the rules, (or did they purposefully ignore them) and why did U.S. trade officials allow the beef to leave the country without proper documentation? I would think our shaky relationship with South Korea would cause us to be extra vigilant on beef exports to that country to make sure the rules are followed explicitly. This time South Korea quickly agreed to resume beef imports except...from the two plants. That will not occur until the U.S. can explain how this happened and assure them it will not happen again.

Export markets are too important to U.S. beef producers to let this kind of carelessness disrupt an already touchy trade situation with an important customer.

My thoughts on Samuelson Sez.