December 3, 2010 / 2:11 AM / 8 years ago

UPDATE 2-US, South Korea continue hunt for trade deal

* Talks involve tricky beef and auto trade issues

* South Korea is America’s seventh-largest trading partner (Updates with talks continuing)

By Doug Palmer

COLUMBIA, Maryland, Dec 2 (Reuters) - The United States and South Korea were continuing high-stakes talks into the night on Thursday in the hopes of resolving auto and beef issues that have blocked approval of a free trade pact for three years.

Carol Guthrie, a spokeswoman for the U.S. Trade Representative’s office, would not comment on the possibility the talks would be extended into a fourth day on Friday. Nor would she say whether a deal was imminent.

South Korean Trade Minister Kim Jong-hoon told reporters before heading into an afternoon session that the two sides were still “far away” from an agreement.

U.S. Trade Representative Ron Kirk seemed to offer a more upbeat assessment, telling reporters “things are good” when asked how the talks are going. He did not elaborate.

Although Kim has said both sides are committed to getting a deal this week, U.S. officials have said their main goal is to make progress on the outstanding issues.

Negotiators failed to meet a self-imposed deadline last month to solve the problems.

South Korea is the United States’ seventh-largest trading partner and eighth-largest export market. Last year, the United States exported $28.6 billion worth of goods to South Korea and imported $39.2 billion of products from that country.

The two countries signed a free trade agreement on June 30, 2007, but it has been stuck in the U.S. Congress because of opposition from the U.S. auto industry. South Korean barriers to U.S. beef have also delayed action.

The United States is asking South Korea to renegotiate the auto terms of the agreement, something that is politically difficult for Seoul to do without getting concessions of equal weight from Washington in return.

The United States exported 7,663 cars and light trucks to South Korea in 2009 while it imported 476,857 from automakers there, according to U.S. Commerce Department figures.

Ford Motor Co and its supporters in Congress complain the lopsided trade is due to South Korean tax and regulatory barriers the Korea-U.S. Free Trade Agreement (KORUS) fails to adequately address.


Karan Bhatia, a former deputy U.S. trade representative, defended the agreement he helped negotiate while serving in the administration of George W. Bush.

“This is probably the strongest FTA (free trade agreement) with the strongest market-opening provisions that have ever existed in an FTA. That’s true with respect to services. That’s true with respect to agriculture and that’s true also with respect to manufacturing,” Bhatia said.

“The notion that we might not get that benefit because we are trying to satisfy one auto company — I just think that would be tragic.”

Senate Finance Committee Chairman Max Baucus also wants Seoul to commit to a process for fully reopening its market to U.S. beef exports, another politically difficult demand because of strong South Korean public opposition.

U.S. beef exporters have already recovered much of their lost market share in South Korea under a voluntary industry agreement to address lingering concerns about several cases of mad cow disease found in the U.S. cattle herd as far back as December 2003.

Much of the beef industry is eager to have the pact approved because it phases out a 40-percent South Korean tariff on U.S. beef and because a major competitor, Australia, is negotiating its own free trade pact with South Korea.

U.S. officials have declined to say if the United States is willing to make concessions on its side to compensate South Korea for changing the terms of the deal the two countries signed in 2007 after a year of negotiation.

The deal would be the second-largest U.S. free trade agreement after the North American Free Trade Agreement with Canada and Mexico. Supporters also see it as linchpin of U.S. economic engagement in the fast-growing Asian region. (Reporting by Doug Palmer; Editing by Philip Barbara)

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