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S Korea denies report of rejecting China’s FTA offer on US worries

The Hankyoreh, Seoul

S. Korea denies report of rejecting China’s FTA offer on U.S. worries

10 August 2006

(Yonhap News) South Korean Trade Minister Kim Hyun-chong on Thursday denied a report that the Seoul government rejected China’s proposal to sign a free trade agreement last year after the United States expressed concerns over Beijing’s huge presence in Northeast Asia.

"The report is not a fact and our government is pushing forward with signing free trade agreements in line with our own roadmap," Kim said in an unusual press briefing, responding to the report in the Hankyoreh newspaper.

In August 2005, China’s Vice Finance Minister Liao Xiaojun offered to start negotiations for a free trade accord with South Korea with significant concessions in agriculture, but South Korea decided to begin free trade talks with the U.S. due to "political sensitivity," the newspaper reported, citing a government report it exclusively obtained.

By the end of 2004, South Korea had put its top priority on signing of a free trade accord with China because of bigger economic benefits than one with the U.S., according to the report.

However, the government changed its stance after the South Korean trade minister visited the U.S. in July 2005 and briefed the government’s top policymakers, including President Roh Moo-hyun, about Washington’s discomfort over a proposed South Korea-China free trade deal, the report said.

China is South Korea’s top export destination, followed by the U.S. The government report was revealed by an opposition Democratic Labor Party lawmaker Shim Sang-jung, the newspaper said.

Kim admitted China had approached South Korea to explore the possibility of a free trade accord, but said it was false that Beijing offered significant concessions regarding agricultural products.

"If the South Korea-China FTA is signed, South Korea’s imports of Chinese agricultural products are expected to surge more than 16 times, or about 10 trillion won," Kim said. In comparison, the South Korea-U.S. free trade pact, if adopted, will cause damage worth as much as 2 trillion won (US$2.1 billion) for South Korea’s agricultural industry, he said. Last month, South Korea and the U.S. ended their second round of talks for a proposed free trade accord, but failed to open the final day of talks due to a dispute over issues surrounding rice and pharmaceuticals.

South Korea and the U.S. announced the launch of free trade talks in February, hoping to sign a formal deal by the end of this year, with the U.S. president’s Trade Promotion Authority, which allows a deal to be approved by Congress without amendments, expiring at the end of June next year.

The South Korea-U.S. free trade talks have spawned large-scale demonstrations from farmers, factory workers, filmmakers, journalists and even dentists here, arguing that if the trade pact is signed, it would threaten their livelihoods.