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S Korea, US end third round of FTA talks without ’practical progress’

Hankyoreh, Korea

S. Korea, U.S. end third round of FTA talks without ’practical progress’

9 September 2006

Seattle, Sept. 9 (Yonhap News). South Korea and the United States ended a third round of free trade talks on Saturday, acknowledging that they failed to make "practical progress" in certain "sensitive areas" such as automobiles, agricultural products and pharmaceuticals.

However, the two countries confirmed their pre-set goal to strike a formal deal by the year’s end. The next meeting is tentatively scheduled for late October in South Korea.

"We haven’t made practical progress in core issues in FTA negotiations with the U.S. side so far," Kim Jong-hoon, the South Korean top negotiator for the talks, said in a press briefing after the four-day round ended.

"While the U.S. side offered a revised tariff offer in merchandise and textiles during the talks, it fell short of our expectations," Kim said.

For now, both sides reached a phase of talks that need a "bilateral flexibility" to find "alternatives acceptable for the two sides," he added.

Kim’s U.S. counterpart felt the same way.

"There certainly were areas that tested our skill as negotiators, including those involving tariff reductions in industrial goods, agricultural products and textiles," Assistant U.S. Trade Representative Wendy Cutler told reporters, describing this week’s negotiations as "challenging." "Frankly, I would have hoped to make more progress this week," she said, adding that pharmaceuticals was another area on which they failed to make a "concrete agreement."

At the second round in Seoul in July, the U.S. boycotted a final day of talks to protest a new South Korean medicine reimbursement policy, saying it would discriminate against U.S. pharmaceutical companies.

Negotiators are racing against time because U.S. President George W. Bush’s "fast-track" authority expires at the end of June next year. The authority allows U.S. officials to conclude free trade deals without congressional amendments.

The talks in Seattle covered as many as 10,000 product lines in 19 categories. South Korea sought to protect its weaker agricultural market, while the U.S. tried to shield its less competitive textile sector.

"The negotiations involved some give-and-take but we tried to tackle easier problems first, pushing back what was thought to be more difficult and challenging," the chief South Korean negotiator Kim said, adding no talks on rice, one of the most sensitive items on the table, were held this week.

Kim’s deputy, Lee Hae-min, said the U.S. presented in Seattle revised tariff reductions for Korean textile imports but they still fell short of Seoul’s expectations.

The U.S., on the other hand, stood firm on its demand that South Korea phase out its tariffs on agricultural goods and automobiles and open financial and other service markets earlier than proposed by Seoul, he said.

Cuttler said sensitive areas, except for textiles, were barely touched on in Seattle.

"Many negotiating groups have homework assignments to complete, including developing counterproposals to bridge our differences," Cutler said, adding that the two sides will meet informally or continue discussions via videoconferencing before the next formal meeting.

"While we had a tough week, we remain committed to push forwards a successful conclusion of the Korea-U.S. FTA," she said.

In Seattle, trade regulations like anti-dumping measures and countervailing tariffs emerged as another potential hurdle to negotiations, both sides said.

South Korea wants the U.S. to ease its trade rules that have often punished big manufacturers such as Samsung Electronics Co. and Hynix Semiconductor Inc, but the U.S. refused to back down, they said.

In a sign of fundamental differences regarding the issue, South Korea calls the category of trade regulations "Trade Remedies," but the U.S. names it "Safeguards." There was also no progress on South Korea’s demand that the proposed free trade agreement cover goods made at an industrial complex in the North Korean border city of Kaesong, South Korean officials said.

In other free trade agreements with South Korea, nine of the 10 countries in the Association of Southeast Asian Nations and four European nations accepted a duty-free status for Kaesong-made goods.

However, the U.S. has rejected that stance, saying a free trade agreement should not apply to goods originating from "a third country." South Korea, the world’s 12th largest economy, is the seventh-largest trading partner of the United States. Last year, two-way trade totaled about US$72 billion with South Korea enjoying a surplus of $16 billion.

Both sides agreed to open a fourth round of formal talks on Oct. 23-27 in South Korea that may be held in the nation’s southern island of Jeju, South Korean officials said. For Seoul, a free trade accord would give big manufacturers a chance to boost their shares in the world’s most lucrative market.

For Washington, a deal would allow agricultural producers to sell more in Asia’s fourth-largest economy.

From a political point of view, if a deal is signed, it would be the most important bilateral event since 1953 when South Korea and the U.S. inked a military alliance.

However, critics claimed a free trade deal would undermine the lives of farmers and working classes and only enrich big businesses.

Outside the conference room, hundreds of U.S. and South Korean activists staged boisterous street demonstrations throughout the talks. Korean protesters argued that the deal, if implemented, would threaten the livelihoods of farmers and factory workers in their country.

Nine South Korean protesters were released after being briefly detained by Seattle police for trying to march into the meeting site.