The beef, which will be returned or destroyed, came from Creekstone Farms Premium Beef LLC, Kang Mun Il, director general at the National Veterinary Research & Quarantine Service said today. Shipments from Creekstone have been barred until it provides an explanation, Kang said. Imports from other U.S. companies are unaffected.

U.S. processors including Tyson Foods Inc. and Cargill Inc. were only allowed to return to the Korean market, worth $814 million to them in 2003, after agreeing to limit supplies to boneless beef. Zero tolerance on bone chips will make it very difficult for the U.S. to return to the market, said Peter Weeks, chief economist at Meat and Livestock Australia.

``It's certainly a bit of a disaster for the U.S.,'' Weeks, chief economist at the trade group, said by phone from Sydney. ``We know from the American side that they're going to find it very hard, if not impossible, to guarantee that there's no bone chip in the product.''

South Korea had been under pressure from the U.S. to resume beef imports amid negotiations for a free trade agreement with the U.S. that may result in an extra $29 billion of trade each year. The two nations are aiming to conclude talks by the first quarter of next year so President George W. Bush can approve it before his trade authority expires in July 2007.

Source: bloomberg.com