U.S. Envoy Optimistic On Free Trade Deal With South Korea

The chief U.S. negotiator in free trade talks with South Korea expressed optimism Thursday that a deal can soon be reached, but warned that the U.S. Congress will never ratify it unless restrictions on American beef imports are completely removed.

"We enter what will be a decisive week in the negotiations with optimism, determination and focus," Assistant U.S. Trade Representative Wendy Cutler told reporters. "And with this mindset I continue to remain optimistic that this deal can be done by the end of the month."

Cutler spoke as negotiators began five days of talks - their eighth round since June - aimed at forging an ambitious agreement with a deadline just a little over three weeks away.

The stakes are high. A deal, if successful, would be the biggest for the United States since the North American Free Trade Agreement in 1993. South Korea is the seventh largest trading partner for the U.S. Bilateral trade totaled $72 billion in 2005.

The two sides need to reach an accord by the end of March to be able to take advantage of President Bush's expiring special Trade Promotion Authority, which makes getting trade deals through Congress easier.

The "fast track" power - which allows him to submit agreements to lawmakers for a straight yes-or-no vote without amendments - runs out on July 1. Various legal requirements, however, mean an agreement has to be submitted 90 days before that.

The countries aimed wrap up negotiations by the end of last year, but the inability to significantly narrow differences in key sectors including automobiles, pharmaceuticals and U.S. antidumping laws has slowed progress.

"We will make every effort to resolve all outstanding issues," Cutler said, emphasizing that the five days of talks would be the last formal round.

Still, she cautioned that a long-running dispute over imports of U.S. beef into South Korea remained a potential deal-breaker.

Though the beef issue is not formally part of the free trade talks, and is the responsibility of the two nations' agriculture officials, it has cast a long shadow over the negotiations.

"Our Congress continues to make it abundantly clear to us that there will be no FTA without a full reopening of the (South) Korea beef market," Cutler said.

South Korea suspended U.S. beef imports for almost three years after mad cow disease was found in the United States in 2003.

It allowed a partial resumption late last year, letting in boneless meat from cows under 30 months of age. But the first three shipments were rejected for containing banned bone fragments and no American beef has reached South Korean store shelves.

Washington has complained bitterly, saying the beef is safe and that the bone chips posed no danger.

Authorities in South Korea, formerly the third-largest export market for U.S. beef, say the bone fragments, which they believe could harbor mad cow disease, constitute a matter of consumer safety.

Still, in an apparent concession, South Korea's Ministry of Agriculture and Forestry said Thursday in a statement that it will adjust quarantine standards this month for bone fragments.

South Korea notified U.S. agriculture officials of the plan during talks on the issue Tuesday in Washington, and the U.S. did not oppose it, the ministry said.

Under the lowered standards, bone fragments will still be unacceptable, but Seoul will return only the containers of meat containing bones, instead of rejecting the entire shipment, the statement said.

USTR's Cutler appeared cool to the idea, calling it, among other things, "commercially unfeasible."

Separately, Malaysia's prime minister on Thursday promised that national interests will not be compromised in negotiations for a free trade agreement with the United States.

At least five rounds of the talks so far have ended in a deadlock, mainly because of a disagreement over the way Malaysia awards government contracts. But that doesn't mean the talks have ended, Prime Minister Abdullah Ahmad Badawi said.

"It's not off. We are still doing our homework. Whatever we are doing the most important thing is we want to give what is best for Malaysians," he told reporters.