South Korea trade deal gets mixed response in U.S.

By Missy Ryan

WASHINGTON (Reuters) - A major trade deal between the United States and South Korea received a mixed response on Monday as some U.S. business leaders and politicians complained it fell short on boosting U.S. auto and agriculture exports.

U.S. trade officials called the bilateral deal a strong, innovative pact that would improve market access for American cars, beef, oranges and financial industries.

They pointed to the elimination of tariffs within three years on almost 95 percent of consumer and industrial products, and the phasing out over a decade of most other tariffs.

But the deal, which officials wrapped up in a last-minute negotiating marathon, has already raised hackles in Congress.

Sen. Max Baucus, chairman of the influential Senate Finance Committee, threatened to block the deal, saying negotiators failed to ensure sufficient access for U.S. beef exports.

"I will not allow it to move through the Senate, unless and until Korea completely lifts its ban on U.S. beef," he said.

Baucus, who has excoriated Seoul for rejecting three U.S. beef shipments with trace bone chips since last year, said South Korea must open its markets to all U.S. beef, including meat from animals of any age, both bone-in and boneless.

That dispute was not formally part of the trade talks agenda but became a litmus test for the U.S. agriculture.

The agreement comes at a delicate moment for the Bush administration, whose trade-negotiating powers expire at the end of June and which is hoping to win congressional approval for additional trade deals with Peru, Colombia and Panama.

Trade officials have been engaging Congress to bridge divisions. Some Democrats want to see trade deals redone to include stronger protections for workers and the environment.

DISAPPOINTMENT OVER AUTOS

Lawmakers have also honed in on auto exports to South Korea. The office of the U.S. Trade Representative said the deal would revise Korean taxes, reduce non-tariff barriers and set down rules for handling disputes.

But Rep. Sander Levin, who heads the House Ways and Means subcommittee on trade, said the deal failed to lift Korea's "iron curtain" on foreign auto imports.

The Democrat from the auto-manufacturing state of Michigan vowed to oppose the agreement unless it was tweaked to ensure "two way trade" in vehicles.

The Automotive Trade Policy Council, which includes the big U.S. manufactures, also said the deal fell short.