US, S Korea struggle to reach trade pact
By Anna Fifield in Seoul
US and South Korean negotiators kept talking on Monday morning to try to secure a free trade agreement, eight hours after the second deadline for forging the landmark economic agreement passed.
Despite the obvious difficulties in finalising the deal – which seems to be bogged down over beef and rice market access – the two sides continued talking down to the wire.
“It’s a roller coaster – every time I think we’re having the last conversation they have one more,” Steve Norton, the US Trade Representative’s spokesman, told the Financial Times on Monday morning.
Mr Norton declined to speculate on when an announcement might be made. ”I just don’t know any more,” he said.
South Korean stocks rose strongly on Monday morning amid hopes that the trade deal will be announced later in the day. They were also boosted by data showing strong export in March and the highest level sentiment among the country’s manufacturing companies for five months. The Kospi index rose 0.6 per cent to 1460.90 as of 9:30 local time, close to its highest for a month.
The negotiators missed their first self-imposed deadline – at midnight on Friday Seoul time – then the second, more crucial deadline at 1am on Monday.
They are racing against the clock to submit the deal in Washington on Sunday so they can take advantage of President George W. Bush’s authority to fast-track deals through the US Congress with a simple yes or no vote. There is a widespread understanding that the deal will not pass through Congress if it is opened up to debate and amendments.
Seoul and Washington have been negotiating intensively for 10 months to try to meet the ambitious timetable.
However, going into this final round of talks, they had reached agreement on only three of the 17 areas under review – competition, customs and government procurement – although earlier this week they said they were ”very close” to deals on eight other chapters, including financial services, labour and the environment.
The two sides have been unable so far to close the gaps in their positions on agriculture in particular.
Seoul , which runs a $1.9bn deficit with the US, is seeking to phase out tariffs on several sensitive commodities, while Washington wants an immediate end to tariffs.
The US has been pushing for the resumption of beef imports to Korea , which were suspended following an outbreak of mad cow disease in the US but have now been deemed safe.
Although beef is not part of the deal, US negotiators have warned that an FTA will not be ratified unless Korea allows the full resumption of imports, and Seoul on Monday indicated that it would be prepared to allow this from May.
Washington has been pushing Seoul to include a timetable for allowing access to the rice market but Seoul has insisted rice – a sensitive, emotionally-charged sector in Korea – must be excluded from the deal.
The deal represents a huge economic opportunity for both countries, whose annual bilateral trade now exceeds $70bn but could rise to $90bn with a comprehensive agreement.
For the US, any deal would be the largest since the North America Free Trade Agreement accord was signed with Canada and Mexico more than a decade ago and would give the US an important bridgehead into Asia.
For South Korea, the deal would give it much greater access to the markets of its second-largest trading partner and could act as a catalyst for the broader economic reform that many analysts think is needed to ensure the country does not become ”sandwiched” between economic giants China and Japan.
