Washington and Seoul agreed a landmark deal yesterday that will dramatically liberalise trade between the countries, giving the US an economic foothold in northeast Asia and helping South Korea upgrade its economy.
The agreement is the biggest for the US since the North American Free Trade Agreement with Canada and Mexico, and will lead to about 95 per cent of tariffs being eliminated within the next three years, negotiators said.
The deal could trigger a wave of agreements across Asia and is seen as vital to keeping US trade policy alive in the face of growing political discontent over the benefits of free trade.
The deal still has to be ratified by the US Congress and the South Korean national assembly, where it is likely to face difficulties because of the unpopularity of both presidents and their weak representation in their respective houses.
The pact was struck just minutes before the deadline for US president George W Bush to notify Congress of his intent to ratify the agreement, before his authority to "fast track" deals with a simple yes or no vote expired.
Mr Bush sent a letter to the Democratic leadership in Congress within moments of the deal being signed, saying the agreement would "further enhance the strong US-Korea partnership, which has served as a force for stability and prosperity in Asia".
There was immediate condemnation from Democrats, led by members of Congress from states that depend on farming and car manufacturing - two sectors that lost out in the deal. Michigan senator Debbie Stabenow said: "I will do everything in my power to defeat this agreement."
After all-night talks, Karan Bhatia, the deputy US trade representative, and Kim Hyun-chong, Korea's trade minister, both declared the agreement to be "historic" and said it would strengthen the half-century old ties between the two countries.
Under the agreement, tariffs on all vehicles under 3,000cc will be eliminated immediately, and phased out over three years for bigger passenger cars. Tariffs on pick-up trucks will be phased out over 10 years.
Rice was entirely excluded from the deal, in line with Seoul's wishes, while Washington received an undertaking that South Korea would allow the resumption of beef imports - suspended after the BSE crisis - when the World Organisation for Animal Health makes its final ruling on American beef next month.
Korea also agreed to eliminate import tariffs on US beef gradually over the next 15 years, while the US declared it would immediately abolish 61 per cent of tariffs on textiles and garments in terms of its import value.
Significantly, Washington also accommodated Seoul's requests to consider the development of Kaesong, the South Korean-run industrial zone in North Korea. - ( Financial Times service)
