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UPDATE 1-U.S., South Korea welcome long-awaited trade deal

Published 12/03/2010, 11:40 PM
Updated 12/03/2010, 11:44 PM

(Writes through)

By Kim Yeonhee and Doug Palmer

SEOUL/WASHINGTON, Dec 4 (Reuters) - The United States and South Korea welcomed a free trade deal reached after a three-year delay which U.S. President Barack Obama said would boost exports to South Korea by $11 billion and support at least 70,000 American jobs.

An official announcement of the deal is expected in the next few days after both trade negotiators report back to their presidents, a spokeswoman for South Korea's presidential Blue House said.

The two allies signed a trade agreement on June 30, 2007, but ratification has been delayed due to sticking points involving U.S. autos and the opening of South Korean beef market.

"This agreement is meaningful in that it reflects both countries' interests in a balanced way and lays the foundation for a reciprocal win-win," South Korean President Lee Myung-bak said in a statement.

"It will also be an opportunity for the South Korea-USA alliance to make a leap by one notch. Our economy will face an opportunity to make a jump again in terms of quality."

Lee urged parliament and the U.S. Congress to approve the deal as soon as possible.

Obama said U.S. car and truck manufacturers would gain more access to the Korean market "and a level playing field to take advantage of that access".

"We are strengthening our ability to create and defend manufacturing jobs in the United States, increasing exports of agricultural products for American farmers and ranchers and opening Korea's services market to American companies."

The American Chamber of Commerce in Seoul expressed support for the final agreement, saying it was critical to the durable recovery of the U.S. job market.

"The agreement announced today provides renewed proof that the United States is willing and able to move forward with a free and fair trade agenda -- one that will support the president's focus on export promotion and job creation," AMCHAM said in a statement.

It said the agreement was expected to go into effect in July 2011.

As part of the revisions agreed over several days of talks this week in Columbia, Maryland, South Korea will let the United States keep a 2.5 percent tariff on Korean-built cars for five more years, rather than cut it immediately. [nN03287146]

The new supplement agreement allows 25,000 cars per U.S. automaker to qualify for entry into the South Korean market based on U.S. safety standards. That is about four times the amount agreed to under the deal struck in 2007.

It also allows the United States to keep a 25 percent tariff on trucks until the eighth year, instead of beginning to reduce it in the first year. The United States will still have to eliminate the duty in year 10 of the pact.

South Korea is no longer required to eliminate immediately its 8 percent tariff on U.S. auto imports, but will reduce it to 4 percent for four years before eliminating it.

Seoul will still immediately eliminate a 10 percent tariff on U.S. trucks under the revised pact.

South Korea was given an additional two years -- until 2016 -- to eliminate duties on some U.S. pork products.

Even with the changes announced on Friday, the agreement will likely divide Obama's fellow Democrats, meaning he will have to work closely with Republicans to win passage of the Korea-U.S. Free Trade Agreement.

Both the Senate and House of Representatives must approve the deal for it to become law. (Editing by Nick Macfie)

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