Front Page	E-mail PagePrint Version

Negotiators reach a comprehensive trade pact just hours before a critical weekend deadline

WASHINGTON, DC – 04/04/07 – Beating a critical weekend deadline by just hours, the US has concluded a free-trade agreement (FTA) with South Korea, making it the latest such agreement reached under the president's trade-promotion authority (TPA).

The agreement was concluded on Sunday, the last day that Trade Promotion Authority (TPA), or “fast track,” allows the president to submit free-trade agreements to Congress for an up or down vote, without amendments.

Congress now has 90 days to consider the agreement before the president’s TPA expires on June 30.

Originally, the US had said a deal needed to be wrapped by March 31, but on Saturday US officials said the deadline was April 1 in the US.

With the pending expiration of TPA, the US doesn’t plan to launch any new FTA negotiations, said US State Department spokesman Sean McCormack.

Also in question late last week was a proposed US free trade agreement with Malaysia, which was eventually put on indefinite hold when it became obvious that certain hurdles keeping the pact from becoming a reality couldn’t be surmounted before the weekend deadline.

Fast-track authority was granted to President Bush in 2001, when the House of Representatives was controlled by Republicans. With Democrats now in control in Congress, renewal of TPA is uncertain.

The Korea FTA is the "most commercially significant" free-trade agreement the US has reached in more than 10 years, or since the North American Free Trade Agreement (NAFTA), according to a media release distributed by the Office of the US Trade Representative.

The new trade agreement will eventually eliminate nearly all tariffs on the two-way trade in manufactured goods and “offer substantial new market access for US services exports and agricultural products,” it said.

The sometimes acrimonious, 11-month negotiations that led to the pact “demonstrate that two countries with large, complex and dynamic economies, and a tradition of robust public involvement can work through challenges and craft a high-quality free trade agreement," it said.

Major differences over the trade in automobiles, textiles, pharmaceuticals, agriculture – particularly US access to the Korean beef and rice markets – and other issues, including the status of South Korean goods manufactured at a small economic enterprise zone in North Korea, continually threw up obstacles to the rapid crafting of a comprehensive deal.

In the final round of talks in Seoul, South Korean Trade Minister Kim Hyun-chong and Deputy US Trade Representative Karan Bhatia and their subordinates held eight days of intense, sometimes all night, marathon talks, to clinch the deal.

South Korea is the world's 10th-largest economy and the US’ seventh-largest trading partner, while the US is Korea's third-largest market. Two-way trade in goods between the two countries carried an estimated value of $72 billion in 2006, according to the US department of Commerce.

When implemented, the new free trade agreement would expand trade and investment flows between the two countries across a comprehensive list of economic sectors including agriculture, industrial and consumer products, automobiles, and textiles, the statement said.

The agreement also would further enhance the US-Korea partnership that has been "a force for stability and prosperity in Asia," President Bush said in an April 2 statement.

Under the agreement, more than $1 billion worth of US farm exports to Korea would become duty-free immediately and most remaining agricultural tariffs would be phased out over the first 10 years after the agreement is enacted.

More than 90% of bilateral trade in industrial and consumer goods would become duty-free in three years after enactment with remaining tariffs eliminated within 10 years, the USTR said.

The agreement would eliminate Korea's engine displacement-based tax system for imported cars. The US says that system discriminates against American-made autos, which generally are larger than domestically produced Korean cars.

The pact also would ensure that US investors in Korea have the same rights as Korean investors and that intellectual property rights (IPR) are protected.

It would require both the US and Korea to enforce their environmental and labor laws and would establish mechanisms for enhancing cooperation in safeguarding labor rights and environmental protections.

Many South Korean labor and farm groups have denounced the deal with sometimes violent demonstrators saying an influx of US imports will cost jobs and harm livelihoods.

An anti-FTA protester set himself on fire Sunday shouting "Stop the Korea-US FTA" outside the hotel in Seoul where negotiators were meeting.

US businesses, however, are welcoming the new trade agreement.

"For (South) Korea, this FTA is not only the largest deal ever completed, but it also ensures Korean products will have preferential access in the US market, the largest in the world, ahead of its competitors, most notably Japan and China," the Seoul-headquartered American Chamber of Commerce in Korea said in a media statement.

The US Council for International Business (USCIB) in New York also applauded the successful completion of the trade pact.

"This agreement with the world's tenth largest economy has the potential to bring huge economic benefits to US business, workers, consumers, and farmers," said USCIB President Peter Robinson.

The agreement is, he said, “one of the most important free trade pacts the US has ever achieved."

Go back, or read the latest Front Page stories:

Stiffer Toy Import Oversight Sought

WASHINGTON, DC � 09/13/07 � A number of senior-level executives in the US toy and retail industries have called on Congress to enact legislation to strengthen inspections of imports, particularly imports of toys from China; the move comes as Mattel, the largest toy maker in the world, recently announced its third recall of China-sourced toys in a month over growing concerns about a number of consumer safety issues.