U.S. and South Korea push for auto, beef deal to save FTA

WASHINGTON (Reuters) - Top U.S. and South Korean trade officials for a second day on Wednesday searched for solutions to auto and beef trade concerns that have blocked U.S. congressional approval of a three-year-old free trade pact.

Teams led by U.S. Trade Representative Ron Kirk and South Korean Trade Minister Kim Jong-hoon worked into the evening on Tuesday, but U.S. trade officials remained cautious about prospects for finalizing issues this week.

The countries missed a self-imposed deadline just a few weeks ago for solving problems with the deal they signed in June 2007.

The United States exported 7,663 cars and light trucks to South Korea in 2009 while it imported 476,857 from automakers there, according to U.S. Commerce Department figures.

In a joint statement on Wednesday, three influential U.S. lawmakers urged President Barack Obama "to stand firm in resolving issues in these important sectors (beef and autos) so we can move forward with the free-trade agreement."

It was signed by Senate Finance Committee Chairman Max Baucus and Representatives Sander Levin and Dave Camp. Levin and Camp are respectively the outgoing and incoming chairmen of the House of Representatives Ways and Means Committee, which shares jurisdiction over trade with the Senate Finance Committee.

The latest talks come against the backdrop of increased tensions on the Korean peninsula following a North Korean military strike last week on a South Korean island.

"The fact that both sides decided to proceed with the talks despite the current situation on the Korean peninsula demonstrates both sides' commitment to getting this done," said Troy Stangarone, director of congressional affairs and trade for the Korea Economic Institute.

"I'm inclined to think they will reach a deal," he said.

Asked about the outlook for the talks, USTR spokeswoman Carol Guthrie said the United States intended to make progress this week but did not necessarily expect to finish.

"Whether we reach agreement will depend on whether we can achieve our negotiating objectives," Guthrie said.

Meanwhile, a senior South Korean legislator, Na Kyung-won, in a speech in Washington said the two countries should not let special interest concerns stand in the way of finalizing a deal that would bolster a nearly six-decades-old alliance.

IMBALANCE IN AUTO TRADE

Both Ford Motor Co and Chrysler complain the pact negotiated by the administration of former President George W. Bush does not do enough to tear down tax and regulatory barriers that they blame for low sales in South Korea.

U.S. trade officials have refused to say what changes they are asking South Korea to make in the 2007 agreement, but it is believed they are pushing for a slower phase-out in the United States of tariffs on cars and trucks.

Washington has also pressed South Korea to accept U.S. car mileage and emission standards to remove an impediment to U.S. sales in the Korean market.

Guthrie has declined to say what changes the United States would be willing to make on its side to compensate South Korea for modifying the auto terms of the pact.

Levin, of Michigan where much of the U.S. auto industry is centered, has been one of the most vocal critics of the pact's auto provisions. In an op-ed on Monday in Politico, he accused South Korea of limiting foreign access its own auto market "to finance an aggressive push into the United States and other export markets."

Some lawmakers and beef groups also want South Korea to commit to a process to remove remaining barriers to U.S. beef exports.

South Korea has been adamant that its remaining beef import restrictions, which stem from the discovery of mad cow disease in the U.S. herd in 2003, are not up for negotiation at this time.

Tens of thousands of South Koreans took to the streets in protests in 2008, when President Lee Myung-bak gave into U.S. demands for a complete reopening of the beef market.

To help stop the furor, the U.S. industry agreed to ship beef only from cattle not older than 30 months, which are considered least likely to have disease. Under that voluntary pact, the United States has recovered much of its lost sales.

(Reporting by Doug Palmer; Editing by Philip Barbara and Vicki Allen)