Assessing Changes in Dairy Product Import Demand: The Case of South Korea with Implementation of the KORUS FTA

ABSTRACT The impacts of implementing the Korea‐U.S. Free Trade Agreement (KORUS FTA) on South Korea's dairy trade are assessed in this study based on empirical estimates of short‐run and long‐run source‐based import demand parameters for three major imported dairy products. These estimates were derived using the Central Bureau of Statistics (CBS) demand system model. The impacts of the tariff reductions associated with the KORUS FTA were calculated. The results suggest that the KORUS FTA will open South Korean dairy product markets primarily by reducing import prices of international suppliers’ products. The altered import relationships among those suppliers raises overall dairy product imports into South Korea. [EconLit Classifications: F14, Q17].