White House says SKorea trade talks not going well

WASHINGTON (Reuters) - The White House expressed concern on Friday about difficulties in talks for a free trade agreement with South Korea, and said that without progress soon, the negotiations may fail.

"The talks are not going well. Unless the negotiations show some sign of progress in the next few hours, this agreement will most likely not come together," White House spokesman Tony Fratto said in an e-mailed statement.

The White House's pessimistic assessment came a day after President George W. Bush and South Korean President Roh Moo-hyun discussed the deal by phone. A South Korean statement said the leaders had directed negotiators to engage in the talks with maximum flexibility.

But Democratic leaders in the U.S. House of Representatives told the administration in a letter on Thursday that they were deeply concerned about the way the talks were going, and angry at the lack of progress in South Korea's protected auto sector.

The countries have until late Friday Washington time (Saturday morning in Seoul) to reach a deal that by some estimates could boost two-way trade by an extra $20 billion from the current level of nearly $72 billion a year.

Stephen Norton, a spokesman for the U.S. Trade Representative's office, provided little detail on the sticking points in the talks. "Negotiators are still working through things," he said in an e-mail from Seoul.

Myron Brilliant, executive vice president of the U.S. Korea Business Council, said he spoke with U.S. negotiators early Friday morning, Washington time.

"They've made progress but they don't have a final deal," Brilliant said. "Our position remains that we want a good deal. We don't want to have a second-best deal."

That means the agreement has to substantially open many critical sectors of South Korea's economy like autos, agriculture and pharmaceuticals, he said.

"We clearly want to see also we have a sound chapter on investment and competition policy and intellectual property rights. Our negotiators are doing their best to try to make sure that we do have a great deal in those areas. And we look forward to hearing more developments in the next few hours," Brilliant said.

(additional reporting by Lisa Lambert and Doug Palmer)