MercoPress. South Atlantic News Agency

Under intense pressure US and South Korea reach trade agreement

United States and South Korea reached Monday a free trade accord involving 29 billion US dollars and if ratified by the two Congresses would be the largest for the US since the North American Free Trade Agreement in 1994.

This is a strong deal for America's farmers and ranchers who will gain substantial new access to South Korea's large and prosperous market of 48 million people," Deputy US Trade Representative Karan Bhatia told reporters in Seoul. "Neither side obtained everything it sought." The agreement will eliminate duties on products such as South Korean autos and apparel, and cut barriers for American insurers, banks and other financial companies to invest in the Asian nation. South Korea will abolish its 40% tariff on US beef over 15 years and the pork tariff over 10 years, Trade Minister Kim Hyun Chong said at the joint briefing. But rice wasn't included in the accord. Fears that Korean farmers could be harmed by the abolition of rice tariffs led to nationwide protests against trade liberalization over the past few months. Bilateral trade reached 77 billion US dollars in 2006, according to South Korea's Commerce Ministry. The free-trade agreement could boost US exports to Asia's third- largest economy by as much as 19 billion annually, according to the US International Trade Commission. South Korea stands to get a 10 billion jump in exports to the US. The agreement ends ten months of wrangling that peaked with almost round-the-clock talks in Seoul for the past two days. Negotiators extended the talks by 48 hours after missing a self-imposed March 31 deadline. There was intense pressure to close a deal because President George W Bush's Trade Promotion Authority, a so-called "fast track" power, ends on 1 July, and any agreement had to be reached 90 days beforehand - by the end of Sunday. The special power enables Mr Bush to send trade pacts to Congress for a straight yes or no vote, excluding any amendments. Negotiations were hampered by differences over various industry sectors, especially those in vehicles and agriculture. But in a letter to Congressional leaders, President Bush confirmed that an agreement had been reached. "At the end of the day I think we resolved that the benefits to be gained from this FTA were so substantial that it was a deal that was worth doing," said Karan Bhatia. South Korean trade minister Kim Hyun-chong described the agreement as the "most important event" between the two countries since their signing of a military alliance in 1953. The Federation of Korean Industries, which represents Korea's largest companies, welcomed the agreement saying it would promote the two countries' economic interests. But farmers are not pleased. South Korea's agricultural production would decline by as much as the equivalent of 2.1 billion US dollars annually, according to the Seoul- based Korea Rural Economic Institute. Production of beef, chicken and other meat may suffer severely as US imports gain ground, the report said. A fully open South Korean market for US beef would be worth about a billion a year, according to Greg Doud, chief economist for the National Cattlemen's Beef Association. Hundreds of South Koreans have protested against the deal, arguing that a glut of US imports would make Korean businesses uncompetitive and threaten their livelihoods. A number of opposition politicians have gone on hunger strike in protest at the proposed move. But President Roh Moo-Hyun said there is majority public support for the deal despite the protests and predicted parliament would pass it and added that Seoul will start discussions over free trade with the European Union by June.