S. Korea, U.S. free trade deal to take effect March 15

Reuters News
Posted: Feb 21, 2012 10:49 AM
S. Korea, U.S. free trade deal to take effect March 15

By Jack Kim

SEOUL (Reuters) - A free trade deal between South Korea and the United States, which some studies say will boost trade between the two allies by as much as 25 percent, will go into effect on March 15, officials said on Tuesday.

The pact, which was signed nearly five years ago but faced tough resistance from some industry and agricultural interests in both countries, may have more political hurdles ahead in South Korea where the opposition has said it will try to repeal it.

"(South Korea's) trade with Europe has been hit hard because of the recent financial crisis there," South Korea's Minister for Trade Park Tae-ho told a news conference.

"Coming at a time such as this, the U.S. free trade agreement is a positive opportunity for our exports to the United States, which is the world's largest developed market, to grow significantly."

U.S. Trade Representative Ron Kirk, in a statement issued in Washington, said the pact will help support tens of thousands of American jobs in export industries.

"Entry into force of this agreement will open up Korea's $1 trillion economy for America's workers, businesses, farmers, and ranchers while also strengthening our economic partnership with a key Asia-Pacific ally," Kirk said.

The deal will eliminate South Korean duties on almost 80 percent of U.S. industrial products and almost 67 percent of U.S. farm goods on its first day of entry into force.

Commitments opening up South Korea's $580 billion services market also take effect beginning March 15.

South Korea's parliament, currently controlled by the ruling conservatives, approved the deal in November amid rowdy scenes of opposition lawmakers protesting, after it was signed in 2007 by the then-government of left-leaning President Roh Moo-hyun.

Though it was the opposition that initiated the free trade agreement when it was in power, its legislators argue that subsequent changes to allow U.S. carmakers a major inroad into the market and a dispute settlement mechanism will strip South Korea of any ability to defend its interests.

Parliamentary elections are due to be held in April in South Korea and presidential polls are due later in the year. Opinion polls show the ruling conservatives will struggle to hold on to power.

Kirk said President Barack Obama's insistence on renegotiating the agreement to get more favorable auto provisions for the United States was the reason it was approved with "strong bipartisan support" in both the U.S. Senate and the House of Representatives.

The two countries signed off on changes to the auto provisions in December 2010, setting the stage for Obama to finally submit the pact to Congress for approval more than 2-1/2 years after taking office. The U.S. Congress voted to approve it last October.

(Additional reporting by Doug Palmer in Washington; Editing by David Chance and Will Dunham)