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South Korea may discuss free trade deal with North in summit

SEOUL, Aug. 16 2007 (Yonhap)

South Korea may discuss free trade deal with North in summit

South Korea is considering discussing a potential free trade agreement (FTA) with North Korea during the second summit of the leaders of the two Koreas late this month, the South’s trade chief said Thursday.

"I’m aware that a possible free trade deal between South and North Korea is under consideration as one of the agenda items for the summit," Trade Minister Kim Jong-hoon said in a luncheon with journalists in Seoul.

South Korean President Roh Moo-hyun is scheduled to meet North Korean leader Kim Jong-il in Pyongyang on Aug. 28-30, both sides said last week. The meeting is the second of its kind since the two Koreas held their first-ever summit on June 15, 2000.

The two sides are now holding preparatory meetings in the North Korean border city of Kaesong to set the specific agenda for the summit. Government officials and experts say the summit is expected to focus on economic cooperation rather than efforts to dismantle the North’s nuclear weapons program.

"For an FTA, rather than its name or form, what’s more important is North Korea’s willingness toward market opening and international trade," Kim said, indicating the two sides may push for a trade deal with low quality.

Kim’s remark hinted both sides will probably move toward forging a comprehensive economic partnership agreement, which focuses less on market liberalization.

In a Liberation Day speech on Wednesday, President Roh said he will discuss an "inter-Korean economic community" with his North Korean counterpart during the upcoming summit.

"As far as economic cooperation is concerned, I feel we need to start discussing the formation of an inter-Korean economic community," Roh said.

"In this way, the South will have more investment opportunities, while the North will have a chance to make an economic turnaround," Roh said. "We intend to make progress one step at a time from the area that is possible." The second summit comes as North Korea has made progress in dismantling its nuclear weapons program.

Under a February agreement with South Korea, China, the United States, Russia and Japan, North Korea shut down its only plutonium-producing nuclear plant in Yongbyon in return for energy aid.

The shutdown of the North’s reactor, verified by United Nations nuclear inspectors, is the first step toward dismantling the North’s nuclear program.

Earlier in the day, the Bank of Korea said North Korea’s economy contracted for the first time in eight years in 2006, due to energy shortages and falling production in the agriculture sector.

The central bank said North Korea’s economy was valued at US$26 billion last year, compared with South Korea’s $890 billion. The North’s per capita gross domestic income was $1,108 last year, compared with the South’s $18,372, according to the bank.

In the meantime, Trade Minister Kim said he expects the country’s unicameral National Assembly to ratify a hard-won free trade agreement with the U.S., as supporters outnumber opponents.

"I think the prospects for ratification are bright," said Kim, who took the post last week after serving as the South Korean chief negotiator for the free trade talks with the U.S., when asked about the likelihood of ratification. The agreement also must be ratified by the Democrat-controlled U.S. Congress.

"Of course, there are still loud voices of opposition," Kim said. "But, whenever I heard voices of individual lawmakers, I see there are more supporters than opponents." Kim said his government is likely to take steps to ratify the deal between September and December.

South Korea and the U.S. signed the agreement in early July.

The deal is dubbed the biggest commercial partnership for the U.S.

since the North American Free Trade Agreement in 1994, and the largest ever for South Korea.

South Korea is the U.S.’ seventh-largest trade partner. Trade between the two countries last year reached $78 billion.

 source: The Hankyoreh