SKorea and US reach free trade agreement

SEOUL (AFP) - The United States and South Korea on Monday reached a major free trade agreement expected to boost both countries' exports by billions of dollars and rejuvenate the Korean economy. "We have a deal," Steven Norton, spokesman for the US Trade Representative's office, told AFP. Local media also reported an agreement after a marathon final round of talks lasting more than 24 hours.

The trade deal is the biggest for the US since the North American Free Trade Agreement in 1993 and its first with a major Asian economy. It was sealed after 10 months of tough negotiations and just hours before time ran out.

Commerce between the world's largest and 11th largest economies totalled 74 billion dollars in 2006 and studies show this could rise by about 20 percent with the trade deal.

The deal was in doubt till the last minute. The White House late Friday had warned the talks would fail without major progress. Early Saturday, an original deadline was extended by 48 hours and was again extended early Monday.

No details were immediately available of the agreement.

The pact must be submitted to Congress in Washington on Monday if it is to be passed while President George W. Bush still has authority to "fast-track" trade legislation through the Democrat-controlled legislature.

Without his authority to compel a yes-or-no vote without amendments, analysts said the process could drag on for years.

Bush and South Korean President Roh Moo-Hyun had thrown their weight behind an agreement, urging negotiators to be as flexible as possible.

The deal gives South Korea a major boost in the US market over Asian rivals such as Japan, Taiwan and China. The nation rose from post-war poverty to prosperity by protecting key industries, but now faces growing Chinese competition.

Its industries and service sector will be reinvigorated by the competition which a free trade deal would bring, Roh and his ministers believe.

"A free trade agrement will provide a new opportunity and a challenge as well," his Prime Minister-designate Han Duck-Soo told parliament Thursday, adding it was "indispensable to our future."

Roh defied pressure from heavily subsidised farmers and other workers who fear for their jobs, as well as activists. Tens of thousands have taken to the streets in occasionally violent protests since negotiations began.

On Sunday a 56-year-old man set himself alight outside the venue. He was conscious but in critical condition in hospital.

The agreement must also be ratified by Seoul's National Assembly. A newspaper poll of legislators this week showed 55 percent in favour.

Bush also faces a political battle.

US House Speaker Nancy Pelosi and other senior Democrats, in a letter Wednesday to Trade Representative Susan Schwab, complained of "Korea's longstanding iron curtain" excluding US manufactures.

Seoul sold some 800,000 vehicles worth 10.8 billion dollars in the US last year, while US firms exported only some 4,000 vehicles the other way.

Agriculture had been a key obstacle. South Korea insisted rice be excluded from any deal and resisted pressure for quick tariff cuts on other sensitive food items.

The US wanted Korea to open its markets to US beef, both by cutting tariffs and scrapping other barriers.

Before a 2003 import ban imposed over fears of mad cow disease, South Korea was the third largest market for US beef with annual purchases worth 850 million dollars.

Seoul last year agreed to accept US boneless beef but it then rejected three shipments after discovering tiny bone fragments.

Source: http://asia.news.yahoo.com/070402/afp/070402042629top.html