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US official warns against rejecting FTA with S Korea

The administration of US President President George W. Bush warned on Tuesday that a failure to strike a free-trade agreement with South Korea could damage US relations with East Asia.

The warning came as US lawmakers threatened to reject an agreement that does not include the opening up of South Korea's sensitive rice market and removal of non-tariff barriers to US motor vehicles.

The US and South Korea are racing ahead of a March 31 deadline to strike what could be the biggest free-trade agreement (FTA) since the 1993 North American Free Trade Agreement.

"Any let-up in focus that results in our inability to complete agreements with major emerging-market economies like South Korea could have unfortunate consequences," Deputy US Trade Representative Karan Bhatia told a congressional hearing on Tuesday on the free trade talks with South Korea.

"It would likely result in a shift of the region's attention from strengthening their relationships with the United States to doing deals with other major trading partners," he said.

Bush's powers to fast-track trade agreements expire in June, giving US negotiators up to March 31 to present a deal for a mandatory 90-day congressional review.

Bhatia said that a successful free trade pact with Seoul could provide an "important boost to US efforts to remain an active economic presence in a strategically vital" East Asia region.

The region, he said, accounted for more than 37 percent of total world GDP and 29 percent of US exports.

A South Korea-US FTA would establish a "model" that could be replicated with other Asian economies and help the US expand trade liberalization throughout the region, Bhatia said.

But US lawmakers criticized their negotiators on Tuesday for not doing enough to prise open the South Korean market, warning that they would not settle for any half-baked agreement.

The US is saddled with an US$11 billion deficit in automobile trade with South Korea.

Tami Overby, president of the American Chamber of Commerce in Seoul, said South Korea remained the "most closed" auto market and that past bilateral pacts failed to open it to international competition.

Republican Representative Wally Herger demanded that South Korea put rice on the negotiating table.

"This FTA must have comprehensive product coverage, including meaningful access for rice," he said.

Herger also urged US negotiators to reject any offer from South Korea to allow US beef access only in exchange for US abandonment of its rice demands.

Seoul has rejected US beef shipments after finding tiny bone fragments in them, saying it violated an agreement last year that lifted a three-year ban to keep out mad-cow disease.

Despite the differences, Bhatia said "there is strong commitment on both sides" to conclude a "high-quality, comprehensive, balanced and ultimately successful FTA."
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