SEOUL (Reuters) - South Korean President Lee Myung-bak said on Wednesday the United States will be sending an important message on its commitment to free trade if it finally advances a pact it signed with Seoul on opening their markets.
The United States and South Korea are trying to resolve concerns over beef and automobile exports blocking U.S. congressional approval of a free trade agreement by November 10, when President Barack Obama arrives in Seoul for a summit.
Following is a description of the beef and auto provisions and concerns U.S. lawmakers have raised:
The Korea-US Free Trade Agreement (KORUS) requires Seoul to phase out its 40 percent tariff on U.S. beef over 15 years.
However, when the deal was struck, Seoul still had not completely lifted a ban on U.S. beef imposed after the discovery of mad cow disease, or bovine spongiform encephalopathy (BSE), in the U.S. cattle herd in 2003.
In the hope of winning U.S. congressional approval of KORUS, South Korean President Lee Myung-bak’s government agreed in April 2008 to allow imports of all cuts of U.S. boneless and bone-in beef and other beef products from all ages of cattle, as long as specified materials known to transmit BSE were removed and other conditions were met.
The deal caused a political backlash in South Korea, as tens of thousands of protesters took to the streets because of perceived safety concerns. Lee’s popularity plummeted.
To stop the turmoil, the two governments in June 2008 confirmed a “voluntary private sector” arrangement allowing South Korean firms to import U.S. beef produced only from cattle less than 30 months old, considered to be the most safe from BSE.
But key U.S. lawmakers, including Senate Finance Committee Chairman Max Baucus, still want South Korea to accept all cuts of U.S. beef, irrespective of cattle age.
Ford Motor Co and many lawmakers like House of Representatives Ways and Means Committee Chairman Sander Levin, a Michigan Democrat, say the 2007 pact does not do enough to dismantle South Korean “non-tariff” barriers that they believe have long kept American autos out of that market.
They were upset when the administration of former President George W. Bush agreed in the deal to immediately eliminate a 2.5 percent tariff on most South Korean cars and to phase out the duty on larger-engine cars over three years.
The Bush administration also agreed to phase out a 25 percent duty on South Korean pickup trucks over 10 years.
Levin and others had advocated the United States phase out the 2.5 percent U.S. auto tariff over at least 15 years, but allow for a quicker elimination if sales of American cars to South Korea hit certain levels.
They also wanted to preserve the 25 percent truck tariff.
For its part, South Korea pledged in the pact to immediately eliminate its 8 percent tariff on American-built passenger cars and its 10 percent tariff on pickup trucks.
It also agreed to simplify vehicle taxes based on engine size to reduce their discriminatory aspect, to allow self-certification on safety and emission standards for a limited number of U.S. vehicles and “not to adopt technical regulations that create unnecessary barriers to trade and to cooperate to harmonize standards.”
Levin and other critics said the reforms to South Korea’s non-tariff barriers were insufficient.
They also said a mechanism in the pact to resolve auto trade disputes was too weak.
Reporting by Doug Palmer and Jack Kim; Editing by Sanjeev Miglani
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