Obama, Lee hail trade deal, pressure North Korea

WASHINGTON Thu Oct 13, 2011 7:15pm EDT

1 of 2. President Barack Obama (R) and South Korean President Lee Myung-bak listen to their respective national anthems during a formal State Arrival Ceremony at the White House in Washington, October 13, 2011.

Credit: Reuters/Jason Reed

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WASHINGTON (Reuters) - President Barack Obama and South Korean President Lee Myung-bak on Thursday hailed a long-sought trade deal as an engine for job creation in both countries and presented a united front in the North Korean nuclear standoff.

Hosting Lee for a formal state visit, Obama underscored what is widely seen as a high point in the long-time alliance between Washington and Seoul as well as his strong relationship with the South Korean leader.

The top item on the agenda was a new U.S.-Korea trade pact, which is expected to help anchor the United States in the economically dynamic Asia-Pacific region as it competes with an increasingly assertive China.

The two leaders also coordinated strategy to pressure North Korea to abandon its nuclear ambitions, saying Pyongyang had a stark choice to make. But they stopped short of offering any new ideas for re-engaging with the isolated communist state.

The U.S. Congress ratified the U.S.-South Korean trade deal just hours after Lee arrived on Wednesday. It was the largest of three pending bilateral agreements, the other two with Colombia and Panama, and each passed in rapid succession.

Lee received an enthusiastic reception in an address to Congress, where he thanked leaders of both parties for approving the trade pact "in a swift manner, which I am told was quite unprecedented."

Obama has touted the accords as a way to boost U.S. exports and create tens of thousands of jobs at home, as his 2012 re-election chances likely hinge on whether he can reduce an unemployment rate stuck above 9 percent.

But critics, including American labor leaders, say the pacts will actually hurt U.S. employment partly because of heightened competition from South Korean imports.

"America is leading once more in the Asia-Pacific," Obama said, standing with Lee at a welcoming ceremony. "With our landmark trade agreement we will bring our nations even closer, creating new jobs for both our people."

Calling it a "win" for both countries, Lee -- who must still secure endorsement by South Korea's parliament -- said it would become "a new engine of growth" for both countries.

The deal would be the biggest U.S. pact since the North American Free Trade Agreement went into effect in 1994.

Obama, a Democrat, sent the three pacts to Capitol Hill just 10 days ago, four to five years after they were first negotiated under his Republican predecessor, George W. Bush.

NORTH KOREA ON THE AGENDA

Lee has proved a reliable partner for Obama, lining up with U.S. policy on North Korea, Afghanistan and the G-20 summit aimed at stabilizing the world economy.

But South Korea had chafed over U.S. delays in getting the trade deal passed, including the renegotiation of auto provisions to get a better deal for U.S. car makers.

Despite that, Lee -- whose mandatory single term ends in early 2013 -- has managed to build personal chemistry with a U.S. president known for a mostly detached diplomatic style.

Lee was treated to an elegant dinner at the White House on Thursday, with the State Dining Room draped in autumn colors and decorative apple centerpieces on each table.

The menu included Texas beef. South Korean concern over the safety U.S. beef, following the discovery of some cases of mad cow disease in the U.S. herd in the early 2000s, was one of issues that delayed approval of the trade deal.

Obama on Friday will then take Lee for a road trip to Detroit, home of the U.S. auto industry.

As Washington deals with an alleged Iranian plot to kill the Saudi ambassador to the United States, the focus on North Korea was a stark reminder that Iran is not the only nuclear standoff that continued to dog the Obama administration.

The U.S. and South Korean leaders sought to show they saw eye to eye over North Korea's disputed nuclear program.

"The choice is clear for North Korea: If Pyongyang continues to ignore its international obligations, it will invite even more pressure and isolation," Obama told a joint news conference. "If the North abandons its quest for nuclear weapons and moves toward denuclearization, it will enjoy greater security and opportunity for its people."

Lee made clear that Seoul and Washington spoke with "one voice" on their insistence Pyongyang must first take concrete steps to show it is serious about getting rid of its nuclear weapons as it pledged to do in a 2005 international agreement.

Ties between the two Koreas have been frosty since Lee took office in 2008 and linked aid to progress on North Korean nuclear disarmament. Relations deteriorated further after the North's deadly attacks on the South last year -- the sinking of a South Korean warship and the shelling of an island.

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

Recent conciliatory gestures by both Koreas have raised hopes for an opening to restart negotiations, but Seoul and Washington insist Pyongyang must first show it is sincere.

(Additional reporting by Paul Eckert, Caren Bohan, Laura MacInnis, Doug Palmer, Alister Bull, Editing by Sandra Maler)

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