March 6, 2006

S.Korea, U.S. to start free trade talks in June

By Jack Kim

SEOUL (Reuters) - The United States and South Korea agreed
on Monday to start a formal round of free trade talks in June,
dealing a blow to farmers and unionists demonstrating against
the plans.

A group of about 40 rallied on Monday in Seoul as trade
negotiators from the two countries agreed to hold their first
official talks, aimed at bringing down trade barriers, on June
5 to June 9 in Washington.

South Korea's chief negotiator, Kim Jong-hoon, told
reporters four additional rounds of talks were planned in
alternate capitals for this year to open up trade between the
two countries that in 2004 totaled more than $70 billion.

"I believe we should finish this job once we start it," he
said, adding the two sides had not set a date for when the
talks should be finalized.

"We have not set a deadline for the talks," he said.

Kim and the U.S. chief negotiator Assistant Trade
Representative Wendy Cutler met at South Korea's Foreign

However, Korean opponents, fearing free trade will spark a
flood of cheap imports from the United States that could ruin
their livelihoods, promised fierce demonstrations against the
government of President Roh Moo-hyun to try to prevent a deal
going ahead.

"The Roh Moo-hyun government will never be excused," said
Moon Kyung-sik, the head of the Korea Peasants' League. "We
will be fighting stronger battles than we did last year."

Two members of the Korea Peasants' League were killed last
year in clashes with riot police when they demonstrated against
a multi-lateral agreement by South Korea to gradually raise
rice imports.

Rice will be one contentious area in the talks between
Seoul and Washington. South Korea insists rice will not be part
of a free trade deal, while the United States says it must be
included in the talks.

Another contentious area is likely to be exports of South
Korea autos to the United States. U.S. car makers are already
feeling the heat as they lose market share to Asian producers.

South Korea's service sector could also create bottlenecks
in the talks because of large state involvement or restrictions
on foreign ownership in such fields as telecommunications.

"Opening agriculture is definitely a big barrier, but
opening (South Korean) services will also be important," said
Daniella Markheim, a trade economist at the Heritage Foundation
in Washington.

Kim said the talks will be open-ended even though White
House authority to negotiate a trade pact that can not be
amended by Congress runs out in July next year.

President Roh said last month reaching a free trade deal
with the United States would be one of the top priorities in
the remainder of his term that runs to February 2008.

The United States, which has the world's biggest economy,
ran a trade deficit with South Korea, which has the world's
11th biggest economy, of $19.8 billion in 2004.

(With additional reporting by Paul Eckert in Washington)