The base tariff of 27% on beef offal is scheduled to phase out in fifteen years and the base tariff of 1% on hides and skins will be eliminated immediately.Under the KORUS FTA, dairy product import-access barriers are reduced gradually as tariffs are reduced and TRQ quantities increase gradually . For skim milk powder, whole milk powder, and evaporated milk , a combined duty-free quota of 5,000 MT is established and this amount grows at a 3% annual compounded rate in perpetuity. As shown in Table 4.o, the United States does not export milk powder to Korea. The major exporter of milk powder is Australia. However, the duty-free quota provided under the KORUS FTA will provide substantial new access given that recent exports of these products to Korea have been near zero. The current tariffs of 176% for skim and whole milk powder and 89% for evaporated milk remain as over-quota tariffs. While significant relative to Korea’s current market, the quota of 5,000 MT is small relative to recent global exports of milk powder from the United States, which reached more than 270,000 MT in 2007. Cheese has a duty-free TRQ set at 7,000 MT that expands annually at a 3% compounded rate. The tariff is phased out in equal installments over ten years for cheddar cheese and fifteen years for other cheeses. In the case of cheese,farming vertical the duty-free TRQ represents about 10% of Korean consumption and is slightly less than total U.S. exports of cheese to Korea in 2007.

The United States is already the number two exporter of cheese in the Korean market, following New Zealand. Thus, in addition to duty-free exports, even more new access will be created by reductions of the current 36% tariff. The Korean cheese market has been growing rapidly and duty-free access and low tariffs will expand exports to Korea substantially. The United States is the number one lactose exporter to the Korean market and competes with the Netherlands and Germany. Under the KORUS FTA, the base tariff of 49.5% on lactose is scheduled to go to zero in five years. The lower tariff will expand the U.S. share in the Korean lactose market. The Korean market for casein imports is also sizable, amounting to more than $58 million. The United States does not have a presence in the Korean casein market, which is dominated by New Zealand. The 20% base tariff is scheduled to phase out in seven years under the KORUS FTA. Korea has a sizable whey market. In 2007, total imports of whey powder were $144 million in value. Major exporters are the Netherlands, the United States, and Canada, which have a combined market share of close to 80%. Under the KORUS FTA, feed whey receives immediate duty-free access and the initial quota for food whey is set at 3,000 MT. That quota will grow annually at a compounded 3% rate until year nine. The over-quota tariff will be reduced immediately from 49.5% to 20% and will phase out over ten years. The initial quota set for U.S. exports far exceeds current export levels. However, immediate tariff elimination for feed whey and reduction of the food whey tariff to 20% will expand access. This will give California suppliers preferential access relative to competitors from the Netherlands and Canada.

Korea’s current imports of butter are not substantial due to the high tariff and there are very few imports from the United States. The KORUS FTA establishes a TRQ for butter with duty-free access for 200 MT and that amount grows at a compounded rate of 3% per year until unlimited duty-free access is allowed in year ten. Dairy products are the number one agricultural product in California when measured by total revenue and the California industry has expanded substantially. California dairy exports have also expanded rapidly in recent years. Dairy exports from California to Korea were about $6 million in 2006, but U.S. exports of dairy products to Korea tripled from 2004 to 2007, reaching more than $70 million. The potential for dairy exports is important to consider in some detail for two additional reasons. First, the dairy product market in Korea is large in value and Korea is already an established market for major exporters of dairy products. Second, although Korea clearly has a cost disadvantage in dairy production, the domestic industry is sustained by trade barriers and government price subsidies . This suggests that any changes in government dairy policy may offer an additional market potential for exporters, especially for processed products that do not entail high shipping costs.California is a major competitive producer of japonica, the type of rice favored by Korean consumers, and rice was a major focus of the agricultural negotiations. In recent years under WTO agreements, Korea has emerged as a significant market for California rice. In the WTO agreements, Korea was able to maintain strict quota import controls that limited imports to 4% of domestic consumption by 2005.

Korea then agreed to a second round of gradual quota expansions that will result in access for all WTO members to export about 8% of domestic consumption to Korea by 2015 . This additional market access fulfilled Korea’s obligations under the WTO agreement of 1994 and was unrelated to the KORUS FTA. California has been able to export a portion of this quota access. The California rice industry pressed hard during the FTA negotiations to achieve additional U.S.-specific market access for rice. Even if complete free trade could not be achieved, the opportunity to expand access to Korea would allow a steady and secure market in which consumers are accustomed to paying premium prices for rice and California rice has the potential to compete well in terms of quality. Throughout the FTA negotiations, Korea maintained that it would allow absolutely no additional rice access as part of the KORUS FTA. Indeed, the Korean government refused to allow its negotiators to even consider or discuss any market opening for rice. Korea pointed to the United State’s unwillingness to allow additional market access for sugar in its free trade agreement with Australia as a precedent. At the end of the day ,vertical rack the United States finally signed an agreement that did indeed exclude any additional market access for rice. This was a major disappointment for the California rice industry, which had been a major supporter of the negotiations.This report has shown that there is a substantial potential to expand exports to Korea for many California agricultural commodities. Lower trade barriers will allow California agriculture to compete in a large, growing, and lucrative market. Commodity prices are high in Korea and consumers are willing to pay premiums for high-quality products of the type produced in California. Thus, with free trade, California agriculture should be in an excellent position to compete on both price and quality. We focus here mainly on import access and new market opportunities. At the same time, we recognize that expanded access to the Korean market for the United States should be considered in the context of the broader world market for agricultural products. Trade diversion will limit how much total U.S. exports rise once access is granted in Korea. Therefore, growth in exports to Korea does not necessarily translate to the same amount of growth in total exports. It is beyond the scope of our analysis to develop detailed price implications for California agricultural products. Agriculture was a major item on the negotiating agenda. Because of concerns from Korea’s agricultural lobby, Korea excluded from the agreement any liberalization for rice, limited access improvements for citrus fruit, and delayed market opening for several products of interest to California agriculture. Nonetheless, the resulting agreement will substantially improve access for a broad range of California agricultural commodities.European farmers have retained a surprising degree of political influence, despite demographic and economic decline. Today, farmers account for less than 5% of the population , and agriculture’s contribution to the European Union’s GDP is under 2% . Despite these substantial losses in population and economic significance, farmers have succeeded in defending existing programs, defeating unwanted policies, and extracting new funding commitments. Although there have been repeated efforts to cut agricultural aid, and despite the fact that the population it maintains has declined dramatically, spending on the European Union’s1 Common Agricultural Policy has not diminished.

The CAP has been, from its creation until today, the single largest program in the European Union. At present, the CAP consumes roughly 40% of the EU budget. Even though the agricultural community has shrunk dramatically, reformers have struggled to redirect funds from the CAP to other programs and arenas. European leaders regularly communicate that one of the Union’s core objectives is to foster growth and modernization . Yet, in the EU’s most recent budget, set for 2014-2020, the CAP remained again the largest single program in the EU. Moreover, €20 billion was removed from the “growth and competitiveness” plan, which funds research and development and cross-border infrastructure projects, and redirected to provide additional funding for farm subsidies. Not only did reformers fail to cut CAP funding, but they could not stop the policy’s advocates from diverting money from investments in future competitiveness to farmers. This sharp incongruity between continued robust financial commitments for agricultural policy and the unrelenting decline of the population it targets motivates the central puzzle in my dissertation. Why has agricultural assistance remained so high, and withstood so many attempts to cut it, despite the fact that the population it services has declined dramatically and agriculture is no longer a substantial component of the European economy? The principal outcomes that I seek to explain in my dissertation are the continued high level of CAP spending and repeated failures by would-be reformers. My dissertation describes and analyzes the repeated watering down or total failure of budget-cutting initiatives, while also accounting for the occasional successful reforms. Farmers are a powerful political force, and the CAP itself has a strong bias towards the status quo. Farmers have honed a variety of strategies and tactics for maintaining their political efficacy despite their economic and demographic decline. Reforming agricultural policy, therefore, is an exercise in navigating farmer power. Farmer power, enhanced and sustained by the benefits of the CAP, makes it difficult if not impossible for reformers to cut agricultural spending or impose new costs on farmers. Reformers may be able to change the ways in which farmers are paid to reduce the incentives for over-producing or polluting, but they have been unable to reduce the amount that farmers are paid.The remainder of this chapter proceeds in five parts. The first section, examining a wide range of measures, shows that that commitments to agriculture have remained high, despite a sharp decline in population. In the third section I present my argument, elucidating the methods farmers use for exerting political influence, explaining how the conditions under which reform negotiations occur shape the set of possible outcomes, and highlighting the tactics reformers use to manage farmer influence. The fourth section provides an overview of the cases I examine and the methods I employ. Finally, the fifth section articulates the plan of the study and concludes with some initial thoughts about the overall contribution of the dissertation.The first line of argumentation suggests that demography is destiny, and expects farmer influence to decline over time along with the sector’s share of the population . Farmers, due to their large share of the population, exercised a decisive influence in pre- and inter-war Europe. The way that farmers aligned often affected the trajectory of economic policy and regime outcomes . Moore contends that the revolutionary potential of the peasantry was the key determinant of interwar regime outcomes. Where the peasants were driven off the land by the commercialization of agriculture, as in Britain, liberal democracy prevailed. By contrast, where peasants remained on the land, they provided a mass foundation for either fascism or communism. Luebbert builds upon the work of Moore , contending that the choice of alliance of the family peasantry determined whether a country’s interwar regime became social democratic or fascist. A peasant-urban worker alliance produced democracy, while an alliance with the urban middle class produced fascism. In the post-war period as agricultural populations plummeted, many saw farmers as doomed to political irrelevance.