South Korea, U.S. FTA faces tough fight

The pact is the biggest such U.S. 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 US$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 U.S. farm exports to South Korea and expands business opportunities for U.S. 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 U.S. car industry.

Democrats complain that the agreement opens the U.S. 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 U.S., 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 U.S. car exports and immediately eliminates Korean tariffs on a number of U.S. cars and trucks. It also contains a mechanism to reimpose U.S. 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 U.S. business groups strongly support the agreement, and labor 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 U.S. beef, which was shut after mad cow disease was found in U.S. cattle in December 2003.

Seoul has begun accepting some U.S. beef, but not from cattle older than 30 months or cuts containing bones.

U.S. agriculture officials say there is no scientific reason now for South Korea to ban any U.S. beef imports.

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