Bourbon industry gains from Korean trade deal

A group tasting Maker's Mark at the distillery in Loretta, part of the Kentucky Bourbon Trail tour.
A group tasting Maker's Mark at the distillery in Loretta, part of the Kentucky Bourbon Trail tour. AP

At issue | April 21 commentary by Todd Tucker, "Proposed Korea trade deal hurts Kentucky bourbon"

Todd Tucker of Public Citizens Global Trade Watch might be a native Kentuckian, but he clearly doesn't appreciate or understand the growing global significance of Kentucky's native spirit.

Here's proof why the proposed U.S.-Korea Free Trade Agreement would be good for bourbon and good for Kentucky.

The Bluegrass produces 95 percent of the world's bourbon. It is a thriving signature industry that provides 10,000 jobs, more than $125 million in tax revenue and attracts nearly 500,000 visitors annually to the Kentucky Bourbon Trail tour.

It has helped Kentucky weather the global recession by adding 6 percent new jobs over the last decade, and its legendary distilleries are investing more than $100 million in current capital improvements.

Bourbon also is one of Kentucky's most widely recognized exports, shipping to more than 125 countries.

Exports of Kentucky whiskeys totaled $192 million in 2010, according to the U.S. Census Bureau, ranking it the state's second-largest agricultural export.

In all, Kentucky bourbon and Tennessee whiskey made up more than 70 percent of all U.S. spirits exports in 2010.

One of the most promising markets is Korea, which already is the 11th largest spirits consumer in the world, valued at $10.1 billion in retail sales in 2010. But it's been difficult for bourbon to gain a foothold because of high tariffs and counterfeit products. The Korea Free Trade Agreement would create a level playing field.

The 20-percent tariff on bourbon would be eliminated immediately, while Korea's tariffs on all other categories of U.S. spirits, such as vodka, gin, rum, etc., will be eliminated over five years after implementation.

Bourbon also would be recognized by Korea as a distinctive product of the United States — as declared by Congress in 1964 — which would be an important step in fighting counterfeit products that attempt to cash in on centuries of Kentucky craftsmanship and tradition.

Tucker is correct about Scotch whisky's foreign dominance in this market. But failure to pass the U.S.-Korea Free Trade Agreement soon will jeopardize the competitive tariff advantage that bourbon will have over Scotch whisky in the Korean market.

The EU-Korea FTA — which enters into force on July 1 — will eliminate tariffs on Scotch and Irish whisky over a three-year period.

The agreement would provide further benefits to Kentucky, according to the U.S.-Korea FTA Business Coalition that includes companies and organizations such as Louisville's Brown-Forman Corp., the Kentucky Chamber of Commerce, Ford and the American Red Cross.

Korean duties on major Kentucky agricultural products — such as feed corn and soybeans — would be eliminated immediately. Eggs would become duty free in 12 annual, equal reductions.

One half of chemical products, and many other manufactured goods produced in Kentucky, would enter Korea duty free immediately. Tariffs on the remaining chemical products would be eliminated over a few years.

Simplified and expedited customs procedures would enable Kentucky businesses to reach Korean customers more quickly and with less red tape, thereby immediately opening new access to Kentucky goods and services in Korea's $1 trillion economy.

According to the U.S. International Trade Commission, full implementation of the agreement could generate more than 3,700 new jobs in Kentucky alone.

For more information, go to http://www.uskoreafta.org/.

It's clear that Kentucky's growing spirits industry will benefit significantly from the new market opportunities created by the U.S.-Korea Free Trade Agreement.

Kentucky is the birthplace of bourbon, and the only place in the world where visitors can learn about the rich history and proud tradition of America's native spirit.

We encourage Tucker to visit his home state, tour our historic distilleries and see firsthand why bourbon is growing in popularity around the world.

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