[Ip-health] Financial Times: US and S Korea reach landmark trade deal

[Thiru Balasubramaniam]

US and S Korea reach landmark trade deal

By Anna Fifield in Seoul and Eoin Callan in Washington

Published: April 2 2007 05:30 | Last updated: April 2 2007 07:02

The US and South Korea on Monday said they had agreed on the terms of a
landmark free trade deal that will become Washington=92s biggest pact in
more than a decade, boosting trade by as much as $20bn a year.

The accord was reached just minutes before the final deadline at 1pm on
Monday Seoul time, underlining the difficulties of forging consensus
over sensitive sectors such as rice, beef, autos and pharmaceuticals.

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The terms of the deal were not immediately available on Monday
afternoon but Kim Hyun-chong, Korea=92s trade minister, called it =93the
most important event between the two nations since the signing of the
military alliance in 1953,=94 according to Yonhap news agency.

The deal represents a significant economic opportunity for both sides,
but for Korea in particular.

=93Korea will not only have increased access to their second most
important market but there will be increased momentum for market-based
reform,=94 said Choi Byung-il, a trade expert at Ewha Women=92s University
in Seoul.

As Korea=92s military alliance with the US begins to weaken, the deal
will also give them a new economic relationship, Prof Choi said. =93The
number of US troops might being getting smaller but US investment and
technology will increase. This will be a new era for the US-Korea
alliance,=94 he said.

The successful conclusion of the deal will give Korea increased
leverage when it starts negotiating with other major economies such as
the European Union and China, analysts said. Seoul is due to start FTA
talks with Brussels next month.

For the US, it represents the US=92s largest deal since the North America
Free Trade Agreement accord was signed with Canada and Mexico more than
a decade ago and will give Washington an economic bridgehead in the
region, perhaps triggering trade talks with Tokyo.

US and Korean negotiators were racing against the clock to submit the
deal in Washington on Sunday so they could take advantage of President
George W. Bush=92s authority to fast-track deals through the US Congress
with a simple yes or no vote, without amendments.

The negotiators missed their first self-imposed deadline =96 at midnight
on Friday Seoul time =96 then the second, more crucial deadline at 1am on
Monday, continuing talks until almost midday (11pm in Washington).

The text of the deal is likely to be submitted to the House of
Representatives in the next few days, US officials said. As well as
having to be ratified by the US Congress, it also has to be sanctioned
by the Korean National Assembly, a process that analysts warned could
take some time.

Korea=92s free trade agreement with Chile took almost three years to win
lawmakers=92 approval, and the deal is likely to remain controversial in
Korea, which will hold presidential elections in December and
parliamentary elections a few months later.

There were large protests across Seoul during the 10 months of talks,
with farmers, labourers and filmstars calling the pact =93economic
colonialism=94 that threatened their livelihoods.

The deal also faces some opposition in the US.

Leading US Democrats immediately condemned the agreement =96 in a sign
the deal will face a difficult passage through Congress.

Michigan Senator Debbie Stabenow said: =93I will do everything in my
power to defeat this agreement and ensure that any future fast-track
authority includes provisions guaranteeing that American businesses and
workers can get a fair deal.=94

=93By hastily pushing through this deal with South Korea before the fast
track deadline the administration has delivered another agreement that
will increase our trade deficit, cost us jobs, and hurt our automobile
industry and other manufacturers,=94 she said.

---------------------------------
Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
voice +41.22.791.6727
fax +41.22.723.2988
mobile +41 76 508 0997
thiru@keionline.org