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Non-Tariff Barrier Liberalization and Heterogeneous Price Responses in Korean Beef Markets: An GARCH Analysis of the 30 Month Age Restriction on U.S. Beef Imports

Author

Listed:
  • Kim, Minjung
  • Park, Dayeun
  • Yoo, Do-il

Abstract

Korea's age restriction on U.S. beef imports has remained one of the most contested nontariff measures in agricultural trade policy since its imposition following the 2003 BSE outbreak in the United States. This study empirically examines how relaxing this measure would affect price levels and conditional volatility across the structurally segmented Korean beef market, distinguishing between Hanwoo and Yukwoo cattle. Using monthly price data from July 2008 through December 2024, we estimate a tariff equivalent through the price wedge method, employing USDA cull cow prices as a counterfactual border price proxy. We then model the conditional volatility of each market using ARFIMA-eGARCH specifications with Student-t distributed errors to account for the long-memory properties and fat-tailed behavior characteristic of livestock price series. Major structural events including BSE, foot-and-mouth disease, the Korea-U.S. FTA, and the COVID-19 pandemic are controlled through dummy variables. Monte Carlo simulation under a 2027 NTM removal scenario projects price paths through 2030. Results show that the price level effects of NTM relaxation are minimal, averaging less than 0.4 percent annually for both market segments. However, conditional volatility rises meaningfully, by 1.53 percent for Hanwoo and 0.74 percent for Yukwoo. These findings suggest that the primary risk of import liberalization lies not in price collapse but in a sustained increase in price uncertainty that threatens farm income stability. Policy responses therefore need to prioritize volatility risk management over conventional price support.

Suggested Citation

  • Kim, Minjung & Park, Dayeun & Yoo, Do-il, 2026. "Non-Tariff Barrier Liberalization and Heterogeneous Price Responses in Korean Beef Markets: An GARCH Analysis of the 30 Month Age Restriction on U.S. Beef Imports," 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri 404682, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea26:404682
    DOI: 10.22004/ag.econ.404682
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    References listed on IDEAS

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