UPDATE 1-S.Korea's Lee touts US trade pact as good for world

Wed Oct 12, 2011 4:46pm EDT

* Lee: Trade deal to forge US-Korean "economic alliance"

* Close U.S. ally to be feted by White House, Congress

* North Korea talks seen unpromising but necessary (Recasts with Lee speech in Washington)

By Paul Eckert

WASHINGTON, Oct 12 (Reuters) - South Korean President Lee Myung-bak on Wednesday held up his country's pending free trade deal with the United States as the best answer to the global economic crisis and a boon to Koreans and Americans.

Lee is in Washington this week for a state visit with President Barack Obama aimed at consummating the trade pact that was signed in 2007 but has languished in both countries' legislatures until recently.

The accord "is about providing opportunities to many people in both of our countries," he told an audience of business leaders and Korea experts.

Lee, who rose from poverty to the top levels of corporate Korea before becoming a politician, said the free trade deal removing most tariffs between the two economies would create nothing less than an "economic alliance" between Seoul and Washington

"This economic alliance will promote free trade and send a powerful message all around the world that Korea and the United States stand united in our commitment to rejecting all forms of protectionism and that we are committed to free, open and fair trade," he said.

"History teaches us that protectionism is not the answer when you are faced with a challenge of this magnitude," said Lee, referring to the economic slump in industrialized countries.

Lee has proved to be a reliable and enthusiastic U.S. ally, lining up with Washington on North Korea, Afghanistan, anti-piracy efforts in Somalia and the G-20 summit aimed at stabilizing the world economy.

'A GLOBAL PLAYER'

"South Korea really sort of stepped up, which is part of Lee's agenda for Korea to be more of a global player at a time when the United States wanted to see allies like Korea stepping up," said Korea expert Victor Cha of the Center for Strategic and International Studies (CSIS) in Washington.

Lee's sixth meeting with Obama since 2009 will feature a full state dinner on Thursday -- following his address to a joint session of the U.S. Congress shortly after American lawmakers are expected to approve the free trade agreement. South Korea's parliament is also debating the pact.

The Obama administration has said the trade pact will create thousands of U.S. jobs and double exports to South Korea in five years. Washington hopes the trade deal will build momentum for a wider Trans-Pacific free trade arrangement.

Lee urged U.S. and Korean executives to promote the trade deal by expanding investment and hiring -- answering critics of the deal in both countries.

The free trade agreement "is a very significant achievement because I know that it will create jobs and it will be beneficial not only to business community, but also to workers, small businesses and consumers," he said.

Obama and Lee will visit Detroit, the home of the U.S. automobile industry and many critics of trade pact, on Friday.

The two presidents will also discuss ways to re-engage with North Korea. Seoul's ties with Pyongyang soured after Lee took office in early 2008 with a pledge to link large-scale aid to progress in U.S.-led international efforts to end North Korea's nuclear programs.

Ties between the two Koreas further deteriorated following the North's two deadly attacks on the South last year -- the sinking of a South Korean warship and the shelling of an island near their contested maritime border.

The provocations by the North, which walked away from six-country nuclear negotiations and conducted its second nuclear test in 2009, helped bring Washington and Seoul closer together.

On North Korea, Lee told his parliament on Monday he would seek "principled dialogue" with Pyongyang while having "flexibility" -- a position that departs from an earlier rigid stance insisting on full reciprocity from Pyongyang.

Although Seoul's outreach to Pyongyang has not borne any fruit, Cha and other analysts expect that the United States will also resume engagement with North Korea in the hopes of moderating the North's behavior and ensuring the cooperation of the North's ally China in future regional disarmament talks.

(Editing by Cynthia Osterman)