US and South Korea sign free trade accord

The United States and South Korea on Saturday signed a free trade agreement facing a tough battle in the US Congress because of Democratic Party concerns that it will cost jobs in the US auto industry. The pact is the biggest such US deal since the North America Free Trade Agreement 15 years ago.
Two-way trade between the United States and South Korea, its seventh largest trading partner, is about $80 billion annually. The agreement concluded on April 1 after 10 months of tough negotiating phases out tariffs on nearly 95 percent of trade in consumer and industrial products between the two countries within three years.
It immediately eliminates duties on more than half of US farm exports to South Korea and expands business opportunities for US service providers in sectors ranging from banking to telecommunications to express delivery.
But top Democrats including House of Representatives Speaker Nancy Pelosi of California and leading presidential candidate Sen. Hillary Clinton of New York have denounced the deal because of its auto provisions.
"While I value the strong relationship the United States enjoys with South Korea, I believe that this agreement is inherently unfair," Clinton said earlier in June in a speech in Detroit, home of the US car industry.
Democrats complain that the agreement opens the US market to more South Korean cars while failing to tear down non-tariff trade barriers that they blame for a huge imbalance in automotive trade between the two countries.
"Last year, South Korea exported more than 700,000 cars into the US, while the United States exported fewer than 5,000" to South Korea, Pelosi said in a joint statement with other senior House Democrats on Friday.
Bush administration officials say the pact does tackle barriers that have blocked US car exports and immediately eliminates Korean tariffs on a number of US cars and trucks. It also contains a mechanism to reimpose US auto tariffs if South Korea violates its end of the pact.
Within the auto sector, Ford has been the most vocal critic of the pact while General Motors has taken a neutral stance. Most other US business groups strongly support the agreement, and labour groups are opposed. Many farm state lawmakers - including Senate Finance Committee Chairman Max Baucus of Montana - have tied their support for the agreement to South Korea fully reopening its market to US beef, which was shut after mad cow disease was found in US cattle in December 2003.
Seoul has begun accepting some US beef, but not from cattle older than 30 months or cuts containing bones. US agriculture officials say there is no scientific reason now for South Korea to ban any US beef imports.