Lee pledges open South Korea economy on U.S. visit

By Missy Ryan

WASHINGTON (Reuters) - President Lee Myung-bak promised to open the South Korean economy on Thursday in his first official visit to Washington, but was silent on a stubborn beef trade dispute even as Seoul announced a deal.

Lee, a former Seoul mayor and construction boss who pulled himself up from poverty, told Bush administration officials at a U.S. Chamber of Commerce dinner he would revolutionize the South Korean economy and welcome foreign companies.

"The Lee Myung-bak government will work to establish a business-friendly environment. Rules and regulations that are not in line with global standards will be reformed, and tax laws will be revised," he said.

But Lee did not make direct mention of an end to the long-running spat over beef trade which has been a frustrating hurdle to approval of a lucrative bilateral trade deal concluded over a year ago.

Lee spoke as officials in Seoul announced the Asian nation had agreed, after days of painstaking negotiations, to relax its import rules for U.S. beef.

A spokesman for the farm ministry said details on the agreement were being finalized, but that an official announcement would be made 0900 GMT on Friday.

The issue has loomed large over the visit of the new leader, who is expected to get a warm welcome from President George W. Bush at his mountain retreat on Friday.

Many U.S. lawmakers have promised to block the trade accord until South Korea permits a full range of U.S. beef exports, which have been essentially blocked since mad cow disease was discovered in the United States in 2003.

Even an agreement to resume shipments of limited products -- boneless beef from animals under 30 months old -- fell apart last fall after U.S. exporters accidentally shipped prohibited cattle parts to the Asian nation.

"I am aware of your concerns. I know of your interests and passion," Lee told U.S. Trade Representative Susan Schwab, Agriculture Secretary Ed Schafer and other dignitaries gathered at the dinner, where Montana beef was served.

"The ratification of the Korea-U.S. free trade agreement constitutes an essential part of this transnational community building," he said.

Sen. Max Baucus, who as chairman of the Senate Finance Committee oversees approval of trade agreements, has been one of South Korea's most vocal critics. He insists the trade deal will not advance until South Korea permits imports of all beef, boneless and bone-in, from animals of any age.

Asked about reports of an agreement following Lee's speech, Baucus said there were other obstacles to congressional approval -- a disagreement over the deal's provisions on auto trade would be one -- but acknowledged a deal on beef "certainly helps."

South Korea is the United States' sixth largest market for farm exports, and the U.S. cattle industry believes it will be a top buyer once trade is fully resumed.

"We've been up and down and back and forth with this agreement and I'm very pleased with the progress that is being made," said Schafer, who did not confirm an agreement.