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U.S., South Korea Trade Talks Hit Impasse

Troubled free trade talks between the U.S. and its longtime ally South Korea hit a new snag on Wednesday over U.S. anti-dumping laws, which Seoul believes are unfairly applied to its
products.

Wendy Cutler, chief U.S. negotiator in the talks, said South Korea suspended negotiations in that area after Washington rejected Seoul's "take-it-or-leave-it" proposal for reforming U.S. anti-dumping and countervailing duty procedures.

Meanwhile, Cutler called South Korea's latest rejection of a cargo of U.S. beef "extremely disappointing" and warned that Seoul must fully reopen its market if it expects to win U.S. congressional approval of trade pact when it is done.

Earlier this year, South Korea reopened its market to boneless U.S. beef -- but not bone-in beef -- for the first time since December 2003, when a case of mad cow disease was found in the U.S.

But South Korea has infuriated U.S. cattle producers and Bush administration officials by rejecting all three cargoes sent since the partial reopening. "Now we're up to three shipments that have been rejected by Korea on the grounds that they found tiny pieces of bone fragments in these shipments," Cutler said. "While ... this topic is technically separate from the FTA (free trade agreement) negotiations, it's on my mind all the time."

A deal with South Korea is still possible by the latest target of early next year, but "we have our work cut out for us," Cutler told reporters in a telephone call.

South Korea, the U.S.'s seventh-largest trading partner, is generally on the defensive in the talks. Washington is demanding Seoul tear down barriers in heavily protected sectors like agriculture and autos and revamp its national health system to allow in more U.S. pharmaceutical products.

Seoul's demands include reform of anti-dumping and countervailing measures, which the U.S. often has used to increase duties on South Korean steel exports in response to U.S. industry complaints of unfair pricing.

U.S. steel producers and their defenders in Congress complain about any changes in anti-dumping laws just as loudly as South Korean farmers protest any opening of the country's highly protected rice market. "This is one of the most sensitive areas for the U.S. in the FTA (free trade agreement) negotiations. We have not said that we are unwilling to discuss these issues. We have also made it clear that we have limited flexibility on what we can do in this area," Cutler told reporters.

Despite continuing problems in the agricultural, pharmaceutical, automotive, textile and anti-dumping portion of the talks, Cutler said she was optimistic the two sides would be able to report progress in other areas by Friday, when the current round is scheduled to end.

The two sides are under pressure to reach a deal by late March so it can be sent to Congress before U.S. trade promotion authority expires. That legislation requires lawmakers to approve or reject the trade pact without making any changes.