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U.S., S. Korea agree to launch free-trade talks

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WASHINGTON (AP) — South Korean cars, cell phones and other consumer goods should drop in price if the United States and its Asian partner complete the biggest free trade deal since America tore down barriers with Mexico and Canada.

The start of talks to link the U.S. with its seventh-largest trading partner were announced Thursday in a ceremony at the U.S. Capitol.

The negotiations, which can begin after a 90-day consultation period with Congress, are expected to take at least a year, and it's an open question whether they will succeed. There is strong resistance, especially among South Korean farmers, to giving up some protections, and there have been violent street protests.

And approval by Congress could face stiff opposition from critics of the administration's free trade policies. Americans would benefit by seeing cheaper prices for such products as South Korean cars, cell phones, televisions and other consumer goods, but critics are concerned that more U.S. jobs might go overseas.

From an economic standpoint, the deal would dwarf any previous U.S. free trade pacts except the 1993 North American Free Trade Agreement that tore down barriers between the U.S., Canada and Mexico.

U.S. Trade Representative Rob Portman and his Korean counterpart, Hyun-Chong Kim, announced the negotiations during a ceremony in the Capitol attended by senators and House members who had urged the administration to pursue a deal with Korea.

Portman said he recognized that completing the talks in a year was an ambitious goal but they needed to be wrapped up by the end of 2006 to be sure the deal could be voted on under fast-track procedures that are due to expire in mid-2007.

Both Portman and Kim insisted that the completed deal would be comprehensive and that there was no understanding going into the talks that agriculture, which is particularly sensitive in South Korea, would be spared.

"We will continue to work to convince our farmers that they will have to find some niche products" that can be exported, Kim said.

President Bush issued a statement saying a free trade pact with South Korea "will provide important economic, political and strategic benefits to both countries and build on America's engagement in Asia."

Several House Democrats who are involved in trade issues voiced support for the start of the negotiations, although they said it was critical for the administration to press South Korea to eliminate its high trade barriers.

New York Rep. Charles Rangel, the top Democrat on the Ways and Means Committee, said, "An ambitious, high-standards free trade agreement with Korea could provide real benefits to hard-working Americans."

Business groups, which have been pushing for these negotiations, also voiced support.

"An FTA with Korea would be a big deal for U.S. manufacturers," said John Engler, head of the National Association of Manufacturers.

Bush has aggressively pursued free trade deals, pushing the number of foreign countries with such agreements from four — Canada, Mexico, Israel and Jordan — when he took office, to 17 currently. The Jordan agreement was negotiated by the Clinton administration but did not win congressional approval until Bush became president.

Bush has reached agreements with Australia, Bahrain, Chile, Morocco, Oman, Peru, Singapore and six nations covered by the Central American Free Trade Agreement — Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua. The CAFTA agreement has not yet gone into effect and the Oman and Peru agreements have yet to be approved by Congress.

South Korea will join a list of 11 countries with which the United States is currently negotiating free trade deals. Portman said Thursday that Malaysia may be added to the negotiating list, but it was growing less likely that Egypt, which had also hoped to start free trade talks this year, will get the go-ahead from the administration.

South Korea has the 11th largest economy in the world and U.S. exports into that market totaled $25.1 billion through November of last year, up 4.6 percent from the same period in 2004. The biggest U.S. sales came in computer chips and industrial machinery.

South Korea, meanwhile, shipped $40.1 billion in products to the United States through November, down 5.4 percent from the same period in 2004. The leading South Korean products sold in the United States were passenger cars household goods, a category that includes cell phones, computer chips and televisions. That left a trade deficit with South Korea of $15 billion through November.

Rep. Sander Levin, D-Mich., complained that South Korea continues to protect its domestic auto industry with high barriers that keep out American autos and auto parts while South Korean producers such as Hyundai enjoy wide access to the U.S. market.

"Korea is a very protected economy. It will be a fight in this country and in South Korea to get it ratified," said Gary Hufbauer, senior economist at the Institute for International Economics, a Washington think tank.