- The Washington Times - Monday, April 2, 2007

The U.S. and South Korea reached a major free-trade agreement late Sunday night, the most significant pact since the 1993 North American Free Trade Agreement.

The deal immediately ran into trouble in Congress, however, with lawmakers warning that they would not approve it unless South Korea lifts its ban on U.S. beef and raising other concerns about barriers against rice and automobiles.

In his notification letter to Congress, President Bush said the agreement “will generate export opportunities for U.S. farmers, ranchers, manufacturers and service suppliers, promote economic growth and the creation of better-paying jobs in the United States, and help American consumers save money while offering them greater choices.”

“The agreement will also further enhance the strong United States-Korea partnership, which has served as a force for stability and prosperity in Asia,” he said.

The deal is expected to increase economic ties with South Korea, which already is the United States’ seventh-largest trading partner of goods, with $32.5 million in U.S. products exported last year.

The agreement would eliminate and phase out tariffs and quotas on a range of farm products, and almost 95 percent of trade in consumer and industrial products would become duty-free within three years, with most remaining tariffs eliminated within 10 years.

It would ease restrictions on trade in automobiles, textiles, investment and services but does not include rice, which South Korea calls a “sensitive” sector.

Senate Finance Committee Chairman Max Baucus said the Senate would not approve the deal unless South Korea lifts its ban on U.S. beef.

“This is an entirely unacceptable outcome,” the Montana Democrat said. “I will oppose the Korea Free Trade Agreement, and in fact, I will not allow it to move through the Senate, unless and until Korea completely lifts its ban on U.S. beef.”

South Korea banned U.S. beef in 2003 after reports of mad cow disease in Canadian cattle. It eased the ban somewhat in September but rejected three shipments after inspectors found bone fragments.

“If Korea ever wants the U.S. Congress to approve a free-trade agreement between our countries, Korea must accept the scientific facts and open its market to U.S. beef now. Both the administration and the Korean government are about to learn just how serious I am about opening Korea’s market to U.S. beef as part of this agreement,” Mr. Baucus said.

Sen. Charles E. Grassley of Iowa, the senior Republican on the committee, said he had “mixed feelings” about the agreement.

“The political reality in Congress is that no matter the benefits, this agreement is dead on arrival until the beef issue gets resolved.” he said.

Deputy U.S. Trade Representative Karan Bhatia acknowledged as much to reporters in a conference call yesterday from Seoul, saying he did not think Congress would approve an agreement without the full reopening of the Korean beef market.

“We have made that very clear to Korea, and I think Korea understands that,” he said.

In the House, Ways and Means trade subcommittee Chairman Sander M. Levin of Michigan said that sending the agreement to Congress “will only be a formality” and that he would oppose it unless the 90-day congressional review period “is used to provide real assured market access to American products.”

He cited continuing South Korean barriers against rice and beef, adding that in automotive products, “the Koreans got what they wanted, immediate elimination of the U.S. tariff on most autos and on all auto parts as well as eventual elimination of the tariff on trucks.”

“The U.S. did not get what was needed an agreement that assures that the U.S. automotive industry will no longer face the barriers to their products, that trade will be truly a two-way street,” he said.

The two sides have differing interpretations on whether the agreement might cover goods from North Korea’s Kaesong industrial park.

South Korea wanted the deal to include exports from the South Korean facility in North Korea, but the U.S. rejected the idea.

“Under this FTA, goods from Kaesong will not be entering the United States,” Mr. Bhatia said.

South Korean President Roh Moo-hyun, however, said in a televised speech that a committee established under the pact would pave the way for goods from the complex “to be recognized as Korean-made products.”

“The benefit of this agreement should expand to cover the whole area of North Korea, let alone the Kaesong industrial complex, in the future,” he said.

The talks have aroused furious passions in Seoul, and security was overwhelming. Tens of thousands of riot police were mobilized to guard ministries, key city intersections and the presidential Blue House. The U.S. Embassy was walled off by dozens of riot police buses parked bumper to bumper. Hundreds of armored police controlled roads leading to the talks’ venue, the hilltop Hyatt Hotel.

On Sunday afternoon, a 56-year-old protester set himself on fire. He was hospitalized with third-degree burns.

But elsewhere, demonstrators seemed as exhausted as negotiators. Although earlier rounds provoked mass demonstrations from a mix of protesters farmers fighting the impact of low-priced U.S. imports, trade unionists who maintain the pact favors big business, even film-makers demanding protection against Hollywood Seoul remained quiet. Protests took place in the city center, but did not disturb traffic.

Andrew Salmon contributed to this report from Seoul.


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