Once again the newspaper is worrying about food prices. There is even a new welfare plan to help feed the needy. Yet once again they make no mention of the real reason Korean people pay dear for food.
I took this cause up about a year ago when the press labeled it with typical urgent flourish “Agflation”. A couple days later, days I after I suggest the same thing, the government announces cuts in tariffs.
So lets review the issue. As you can deduce from the links above the “bold” action was announced on March 6, 2008. Meanwhile the actual cuts in tariffs took place with no fanfare on July 30, 2008. Thats right the problem was so “urgent” that it took them five months to get off their chairs! Astounding responsiveness!
There is a quick moral for foreigners to learn. For some reason you think all the red tape and bureaucratic incompetence is limited to your lot, and then construe it is because the Korean government does not work for foreigners. Really the inefficacy and incompetence of the Korean government is the lot of everyone here. Which is the reason why a Korean can claim they do not discriminate with a straight face, they go through the same stuff on a daily basis. Reminds of an insight of a wise friend of mine, the best way to improve Korea for foreigners is to simply improve it for Koreans.
Meanwhile, lets take a look at the super measures the government took to fight inflation and make food for the average Korean less expensive. Following the party line perhaps, or just being lazy, the English account of the story gives little reference what the tariffs were exactly. They say they were “ended”, but as you can see there is still ambiguity. For a baseline I am using the KORUS FTA text as a baseline, found here.
Imported flour, which currently has a duty of 4.2 percent, accounts for 4 percent of the market, or 72,000 tons.
OK, but “flour” is way to broad, since many things can be processed into flour. In fact the only ones that qualifies as the “current…duty of 4.2 percent” is “Other cereals of wheat”, which is not flour. It is unprocessed grain. Here is a selection of the tariff for the importation of flours:
Rye Flour: 5%
Corn Flour: 5% (but if processed more can be as high as 162.9%!)
Barley Flour: 260%
Wheat Flour: 288.2% (note much different than the claim above!)
Oat flour: 554.8%
Concis Semen: 800.3% (What ever that is!)
I also hasten to add that rice flour importation is pretty much prohibited no matter what you are willing to pay in tariff, and, while I do not feel like looking it up, I am sure the import weight quota is just as unimpressive and vague.
Other items for which import duties will be dropped include aluminum ore, with a 1 percent tax
Apparently there are a different classes of ore. Some with 1% and another with 3%. I do not know the difference, but peculiar there is one. Also note its ore, processed aluminum, including processed chemicals with aluminum as a major component, will still carry a tariff between 3-8%.
Other items for which import duties will be dropped include…raw silk import taxes of 8 percent”
That is only for silk yarn. Raw silk fabric carries a 13% tariff.
Other items for which import duties will be dropped include…cotton yarn…4 percent.
Similarly processed yarn into fabric is between 8-13% tariff remaining.
include…rye seed and methanol that have import taxes of 3 percent and 2 percent, respectively.
See above for Rye, its pretty much the same story as “flour” with all the ambiguity. If you put methanol into something useful, once again the tariff is higher, 6.5% to be exact.
The import quota for spices will be increased from 1,200 to 1,800 tons.
Again this is so ambiguous its meaningless, however it does not say anything about the tariff that is levied on top of the quota. Here is the tariff on selected “spices”:
Vanilla/Cinnamon/Nutmeg/Mace/Cardamon: 8% (and many other common ones)
Citrus Peel: 30%
Mixed Seasonings: 45%
Ginger: 377.3%
Additionally custom duties on medium density fiberboard used in making furniture will be lowered from the current 8 percent to 5 percent.
Hard to nail down exactly what this is. Fiberboard is not listed in the FTA, and there are so many categories for wood it is hard to know. Yet it seems the wood tariffs top off at 8%. Still one wonders what exactly is being cut here, and what remains at the high tariff.
So there you go, that was the bold “relief” from high prices. Note that it easily leaves out many things consumers consume on a daily basis. Nothing on fruits and vegetables, meats and fish, or even more starkly rice. Consumers will still have to pay the same high prices, but at least some chaebol will make some minor incremental profit because some random input is down a couple percentage points in cost. To borrow a phrase, way to “Bravo your Inflation!”
So do me a favor, don’t bother me with these annoying “how poor we are” stories until the government actually does the easiest thing they can do to lower prices. Beside we all know now all the tariffs protect is a bunch of wealthy bureaucrats.
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“Reminds of an insight of a wise friend of mine, the best way to improve Korea for foreigners is to simply improve it for Koreans.”
That is the most insightful thing I’ve ever read on this site.
I’ve been going through a labor board process the past few months, and I swear I’ve gotten more help than a Korean in the same situation will ever get. Sad, really, how they treat each other sometimes.
I’ve been going through a labor board process the past few months, and I swear I’ve gotten more help than a Korean in the same situation will ever get.
That’s impossible. You’re a second or third class citizen!
I’d suggest comparing food prices with no-tariff Hong Kong and Singapore (I’m too lazy myself).
Reminds me of the experiences of a black engineering colleague down in Pusan back in ‘96. He was on a short-term per diem basis, thus would often take buses around town, and would often get hassled by bus drivers (not picking him up, etc.). At first he chalked it up to discrimination, but then got around to noticing that average Koreans were getting screwed just as badly, if not worse.
Also, Dram, you might want to put one of those “read more” thingies in there for the convenience of the readers.
Didn’t the Japanese try that already? Fine thanks they got!
)
I’m involved in making and exporting electronics products, I just love those tarrif table categories. They can be infuriatingly vague in some entries, yet mind-boggling specific in others.
I’m not trying to defend the Koreans tariffs, so don’t get me wrong, since I also believe tariffs are harmful toward the consumers. But I’d like to point out something that I think is very important.
I’m not going to argue Korea’s agriculture tariffs. But the US is not always losing out on trade with South Korea, as always portrayed. For instance, United States raked in $4.7 billion dollars in travel surplus with South Korea in 2007. With the new US Visa free status, South Korea is predicted to register $11 billion travel deficit with the US by 2011 (source: Korea Times today). This is just in travel services. Korea’s service deficit with the US widens much further if you factor in other services that the US sells to Korea, including education.
If you look at this in a very simple term, South Korea’s trade relationship with the US is symbiotic. South Korea makes its money through merchandize trading with the US, and spends it all back (and more) in the US. The money that the US lose out in merchandise trade with Korea, it reaps much more in intangible trade. It’s in the best interest of both countries that both countries are prosperous. If South Korea can’t sell its goods to the US easily, then South Korea can’t afford to buy all the services that the US sells to South Korea.
@cm Wow! What an unbelievable inadvertent elitist argument! “Gee Mr. Kim, I know you want to feed your family more rice, and make beef more than a once in a year treat. However, you need to understand that Mr. Lee is spending all this money to educate his kid in the US.”
Actually to be fair, you are missing my point. I could care less in this case which specific country you are talking about, the US, Australia, or even China. The tariff system is one of the top, easily fixable reasons Korea has high food prices. I could care less where it comes from, and neither does Mr. Kim who wants more food, or more disposable income.
#9, like I said, I agree with you overly protective tariffs are bad for the average Korean consumer. I just wanted to make a point that US-Korea trade isn’t all one sided trade that Americans particularly complain about.
Er…OK. How is that related to the post? Seems a bit of red herring.
It’s highly related since you’re one of the harshest critic when it comes to ROK – US trade, and support reciprocal US trade retaliations.
Dram_man was talking only of Korean tariffs and their effect on the end-user price of food (from anywhere), so a generalized discussion of bilateral trade imbalances is off-topic here.
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