April 3, 2007

 

South Korea and US reach free trade agreement

 

 

The US and South Korea concluded a landmark free trade agreement Monday (Apr 2), officials said, managing to beat a key US legislative deadline.

 

The deal, which requires approval by lawmakers in both countries, is the biggest for the US since the North American Free Trade Agreement, which took effect in 1994. It is the largest ever for South Korea.

 

South Korea and the US agreed to eliminate and lower tariffs and other trade barriers in a wide range of industrial goods and services, including financial services. The agreement also covered sectors such as e-commerce.

 

"The free trade agreement we are announcing today is a historic accomplishment," Deputy US Trade Representative Karan Bhatia told reporters. "It is an agreement for the 21st century."

 

Negotiations began last June in Washington amid much fanfare. Both sides strongly advocated a deal, saying it would boost economic growth in two countries, which already do more than US$75 billion in trade a year.

 

But disputes in areas such as automobiles and agriculture slowed progress, forcing a final round of intense talks in Seoul since last Monday.

 

South Korea, under pressure from farmers who were worried that eliminating protections for rice would destroy the domestic industry, succeeded in keeping the staple food out of the deal.

 

But Seoul agreed to lower tariffs on other agricultural goods, including American oranges.

 

The two sides also agreed to eliminate and phase out tariffs on automobiles, with South Korea also agreeing to change its auto tax structure for larger vehicles, which Washington claimed was discriminatory.

 

The issue of American beef imports, absent from South Korean markets for more than three years after

mad cow disease was discovered in the US in 2003, was not an issue in the free trade talks. Still, Washington apparently came away with expectations it may be on the way toward resolution.

 

Assistant US Trade Representative Wendy Cutler, the chief US negotiator for the talks, said an expected certification of US beef next month as safe to eat by the World Organization for Animal Health will pave the way.

 

"When this classification comes out we look to (South) Korea to promptly reopen its market to American beef," Cutler said.

 

In the final round of talks in Seoul, South Korean Trade Minister Kim Hyun-chong, Bhatia and their subordinates held eight days of marathon talks, sometimes going all night, to clinch the deal.

 

The negotiators were under pressure because US President George W. Bush must notify Congress that he plans to sign a trade agreement 90 days before his special Trade Promotion Authority expires Jul 1, meaning the agreement had to be concluded by Apr 1.