July 10, 2006

South Korea-US hold free trade talks amid protests

By Jon Herskovitz

SEOUL (Reuters) - South Korea and the United States, kicked
off a second round of talks on a free trade pact on Monday with
differences on contentious issues such as agriculture that have
sparked mass protests in Seoul.

After a weekend of protests, thousands of demonstrators,
shouting "down with the FTA," gathered in the rain again and
scuffled with riot police outside the venue in the South Korean
capital, where teams of negotiators from the two sides were
holding talks.

The round is due to continue until Friday.

Protesters say they will try to get 100,000 demonstrators
on to the capital's streets on Wednesday.

About 270 South Korean and 80 U.S. officials will focus on
areas including textiles, agriculture and automobiles,
officials said.

Dubbed KORUS, the pact would be the biggest U.S. free-trade
deal since NAFTA, the North American Free Trade Agreement,
which took effect in 1994.

South Korea was the world's 11th-largest economy in 2005,
according to the World Bank, and seventh-largest U.S. trading
partner. Two-way trade in goods last year totaled about $72

Both sides said they had made good progress in their first
round of talks last month in Washington.

But chief U.S. negotiator Wendy Cutler said the two
countries still had difficult issues to resolve, including
trade restrictions in politically sensitive sectors such as
rice for South Korea and automobiles for the United States.

"But I do not envision any deal breakers," Cutler said at a
briefing with reporters.

"I remain optimistic about our prospects for success for
the KORUS FTA," she said.

Another area of contention is the status of goods produced
by South Korean firms at an industrial park in the North Korean
border city of Kaesong.

Seoul, which sees the park as a model of economic
integration between the two Koreas, wants goods from the park
to be included in the deal while U.S. negotiators say they see
the goods as originating in North Korea and thus not subject to
the bilateral trade pact.

South Korean farm and labor activists are protesting over
the deal, saying opening of the market to more goods and
services by tearing down high tariffs and other barriers would
endanger the livelihood of millions of South Korean workers and

"We shouldn't let these concerns and anxieties expressed by
certain groups deter our work or derail our efforts," Cutler

Negotiators are pushing for a deal by January so the U.S.
Congress can vote on it before the expiry of White House
authority to negotiate trade agreements that cannot be amended.
That authority runs out in mid-2007.

(With additional reporting by Doug Palmer in Washington and
Jack Kim in Seoul.)