November 1, 2010

US, South Korea to revive trade pact

South Korea and the US are ramping up efforts to resuscitate a stalled trade pact - the largest US bilateral trade pact since the North American Free Trade Agreement (FTA) with Mexico and Canada - with the latest talks focusing on barriers to US exports of beef and automobile.

US Trade Representative Ron Kirk met his counterpart, Korean Trade Minister Kim Jong-hoon, in San Francisco on Tuesday (Oct 26) and Wednesday, their first face-to-face meeting on the US-South Korea FTA.

In South Korea, imports of US beef have led to riots; opponents say they fear imports are infected with mad cow disease. The country lifted a ban on US beef in 2008, but in a nod to South Korean public opinion, the US beef industry agreed not to export beef from cows older than 30 months.

US beef exports to South Korea are climbing, helped by the cheap dollar. But Senate Finance Committee Chairman Max Baucus of Montana, a state that exports beef from older cows, is pushing for a substantial change in beef provisions.

The US has put forward specific proposals on these issues, though the two sides are far from a deal. A new EU free-trade accord with Seoul, which goes into effect in July 2011, could put US companies at a disadvantage if Washington and Seoul do not strike a deal, experts said.

The beef issue could be resolved by revamping the private-sector deal that bars older cows, a US trade analyst said. A chief economist of the US's National Cattlemen's Beef Association said the group supports the pact even without additional changes because it would eliminate Korea's 40% tariff on imported beef over 15 years.

The US's main rival in the South Korean beef market is Australia, which is negotiating its own free-trade pact with Seoul.