EU-Korea trade deal puts pressure on Obama to act

Thu Oct 15, 2009 4:35pm EDT

By Doug Palmer

WASHINGTON (Reuters) - President Barack Obama faced increased pressure on Thursday to win approval of a free trade deal with South Korea after the European Union locked up its own pact with Asia's third-largest market.

"We have concluded our negotiations with the EU, which has almost a similar economic size as the United States," South Korean Ambassador to the United States Han Duk-soo said.

"President Obama will visit Korea in November and we hope we will make some progress before that" to resolve concerns blocking approval of the U.S.-Korea free trade pact, Han said in a speech at the Heritage Foundation.

The United States and South Korea signed their free trade deal more than two years ago. But U.S. lawmaker concerns over beef and auto trade with the longtime ally that borders North Korea has blocked approval of the agreement.

Many U.S. lawmakers argue the free trade pact fails to tear down "non-tariff barriers" that keep out American cars. Others want Seoul to remove remaining barriers to U.S. beef imports that stemming from the discovery mad cow disease in the United States several years ago.

Since then, South Korea has continued negotiating free trade deals. It initialed a pact with the European Union on Thursday expected to go into force by the middle of 2010 and is currently in talks with Canada, Mexico and Peru.

"We would like to be the hub of free trade agreements in East Asia," Han said, citing a study that U.S. companies could lose 380,000 jobs to competitors in the EU and Canada if the U.S.-Korea free trade agreement is not approved.

The EU-Korea trade deal could be worth 100 billion euros ($149 billion) to both economies and advocates says it will help both sides fight the worst financial crisis in decades.

It also comes at a time when the United States is already losing market share in South Korea to the EU, Japan and China.

US SAYS "KEENLY INTERESTED" IN EU-KOREA DEAL

Obama sided with the United Auto Workers and other opponents of the South Korean free trade agreement during last year's presidential campaign.

After meeting with South Korean President Lee Myung-bak in June, the two leaders agreed to work on outstanding concerns. However, Seoul has steadfastly refused to renegotiate auto provisions that are the biggest obstacle to U.S. approval.

A spokeswoman for the U.S. Trade Representative's office said the United States was "keenly interested" in the implications of the EU-Korea deal for the United States.

"EU firms compete directly with U.S. suppliers in key segments of the large and growing Korean market, such as machinery, chemicals, plastics, auto parts, and dairy products," USTR spokesman Carol Guthrie said.

"Ambassador (Ron) Kirk believes it is vital to maintain the competitiveness of US businesses and workers in this important market," Guthrie said, referring to the U.S. Trade Representative.

(Additional reporting by Darren Ennis in Brussels; Editing by Cynthia Osterman)

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