US and Korea face tough issues in free-trade talks

The United States and South Korea begin free-trade talks this week that could put relations to the test as negotiators grapple with tough issues ranging from autos and agriculture to relations with North Korea.
The pact has been billed as the biggest US free-trade deal since the North American Free Tree Agreement and the most important development in US-South Korean relations since the two countries signed their military alliance in 1953.
The talks have also spawned fears of job losses in vulnerable industries on both sides of the Pacific. About 50 South Korean farmers, students and labour unionists are expected to join hundreds of US activists in Washington on Sunday to march against the agreement.
Negotiators want to reach a deal by the end of this year so Congress can vote on it before the White House authority to negotiate trade agreements that cannot be amended expires in mid-2007.
South Korea is the world's 10th-largest economy and the United States' seventh-largest trading partner, with two-way goods trade totalling about $72 billion last year. But South Korea has a much more protected market than the United States.
South Korean tariffs for industrial and consumer goods average 11.2 percent, compared with 3.7 percent in the United States. The difference is even greater in the farm sector, where South Korean tariffs average 52 percent, more than 4 times the US level of 12 percent. The pact would reduce duties on both sides to zero percent for bilateral trade.
While both governments believe tearing down barriers to trade and investment would be good for economic growth and prosperity, the United States will be dealing with some of the toughest trade negotiators in the world, said Ed Gresser, trade director for the Progressive Policy Institute.
"The most important issues to both sides are not likely to be easy to resolve," Gresser said.
Rice talks are expected to be particularly difficult, with South Korea signalling it will resist efforts to pry open its heavily protected market to more imports.
"For us, food security is real," Korean Trade Minister Hyun-chong Kim said earlier this year. "Back in the 1950s, when there was a Korean war ... people starved to death because there was no food. ... It affects our national psyche."
'MEANINGFUL MARKET ACCESS': Many US lawmakers complain South Korea remains closed to US autos despite previous promises to open up.
That has prompted House of Representatives Minority Leader Nancy Pelosi and other Democrats to demand South Korea show "measurable and meaningful market access" for US automakers before the United States drops remaining tariffs.
"What we're saying is there's got to be an end to the one-way street," said Rep. Sander Levin, a Michigan Democrat. "We're telling (US trade negotiators) if you don't address these high walls you're going to hit a stonewall in Congress."
Another tough issue concerns products made in a South Korean-run industrial park in North Korea.
Seoul sees the Kaesong Industrial Park as a model for the eventual unification of the Koreas and wants goods made there to qualify for duty-free treatment in the US market. That is likely a tough sell in the US Congress, where many lawmakers oppose any loosening of sanctions on Pyongyang.
South Korean President Roh Moo-Hyun, whose party suffered a crushing defeat in recent local elections, needs Kaesong in the deal, said Grace Parke Fremlin, an attorney and partner in Steptoe and Johnson's international group.
"Getting US support on this issue is important to the Korean government's ability to garner broad support for the free-trade agreement from the Korean public," Fremlin said.