October 25, 2010 / 3:36 PM / in 7 years

U.S., S.Korea to meet on long-stalled free trade pact

WASHINGTON (Reuters) - Top U.S. and South Korean trade officials will meet in San Francisco on Tuesday to discuss how to fix beef and auto trade problems that have blocked approval of a free trade agreement since 2007.

The meeting comes just a couple of weeks before a November 10-12 deadline set by President Barack Obama and South Korean President Lee Myung-bak for resolving differences over the pact, so Obama can submit it to Congress for approval.

The U.S. Trade Representative’s office on Monday announced the meeting between U.S. Trade Representative Ron Kirk and South Korean Trade Minister Kim Jong-hoon. However, it did not reply to requests for additional information.

Doug Goudie, director of international trade policy at the National Association of Manufacturers, said he did not expect the two sides to announce a deal on Tuesday.

“But I would hope their discussions tomorrow put them a long way down the road toward an agreement on the outstanding issues,” Goudie said.

Obama -- whose fellow Democrats may lose their U.S. House of Representatives majority in the November 2 elections but probably keep control of the Senate -- criticized the agreement negotiated by the administration of his predecessor, George W. Bush, when he was running for president in 2008.

But since taking office 21 months ago, he has promised to resolve problems with the pact.

He made his most forceful commitment after a meeting with Lee in June in Toronto at the Group of 20 summit.

“I want to make sure that everything is lined up properly by the time I get to Korea in November, and in a few months following that, I intend to present it to Congress,” he said.

Obama is going to Seoul for next Group of 20 summit, which South Korea will host. Many see his ability to resolve issues blocking the agreement as a test of his international leadership on trade in the face of opposition at home.

Rep. Kevin Brady, a Texas Republican who could chair a key congressional trade subcommittee if his party wins control of the House, said South Korea should not wait to see the outcome of November 2 election before striking a deal.

“Regardless of who holds the majority in Congress, the two remaining issues must be resolved satisfactorily,” Brady said at the Peterson Institute for International Economics.

He also emphasized the importance of meeting the G20 deadline and said if that happened he was optimistic Congress would approve the pact during the first six months of 2011.

The push to wrap up the agreement comes at a difficult time for Democrats because many party activists Obama is trying to get to the polls on November 2 oppose the agreement.

That includes the United Auto Workers union and the 12.2-million member AFL-CIO labor federation, which helped Obama win key industrial states in his 2008 presidential bid.

Union workers are unhappy that a 25 percent U.S. tariff on pickup trucks would be phased out over 10 years and a 2.5 percent tariff on cars would be immediately eliminated.

Ford Motor Co. has complained the pact does not do enough to dismantle nontariff, or regulatory, barriers it says keep U.S. cars out of South Korea.

Seoul has defended the agreement as a hard-struck bargain in which both sides have already compromised.

Under the pact, Seoul would immediately eliminate an 8 percent tariff on all U.S. passenger cars and revamp a tax system that imposes higher taxes on cars with larger engines.

The agreement also contains a “snap-back” provision that would allow the United States to reimpose tariffs under certain circumstances and creates a bilateral auto working group that would serve as an “early warning system” for potential regulatory issues that could impede auto trade.

“The United States wants to take one or two things back” from the agreement, Kim told a Seoul audience last week during a discussion on the trade pact. “But the thing is when you start taking things back, it’s like a Pandora’s box.”

South Korea has already taken steps to open its market to more U.S. beef by agreeing in 2008 to accept all cuts from cattle under the age of 30 months.

However, its reluctance to accept more types of U.S. beef has been an obstacle to congressional approval of the FTA.

The United States has struggled to completely reopen a number of Asian markets in the aftermath of some cases of mad cow disease found in the U.S. cattle herd earlier this decade.

Reporting by Doug Palmer; Editing by Philip Barbara and Jerry Norton

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