S. Korea, U.S. Reach Trade Deal

Last-Minute Pact Faces Tall Hurdles

The Bush administration yesterday touted the benefits of a landmark trade deal struck overnight with South Korea, asserting that it would pry open markets in the world's 10th-largest economy for a range of U.S. goods, from pork and vegetables to pharmaceuticals and automobiles.

Administration officials portrayed the deal -- which faces stiff opposition in Congress and in South Korea -- as a milestone in a U.S.-led campaign to eliminate tariffs and reduce trade barriers globally. It would be the largest trade deal adopted by the United States since the North American Free Trade Agreement took effect more than a decade ago.

"This is a historic moment for our two countries," U.S. Trade Representative Susan C. Schwab said in a statement released shortly after the deal was announced in Seoul, ending an eight-day negotiating round that barely achieved agreement before a deadline of late Sunday night, Washington time.

Lawmakers will have final say over the deal in both countries. In Washington, it lands in a Congress newly controlled by Democrats who are challenging the administration on multiple fronts, threatening to derail pending trade pacts with Peru, Colombia and Panama. Key Democratic leaders and labor unions swiftly assailed the South Korea deal as bad news for American farmers and workers.

Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, which will vote on the trade deal, threatened to block passage if South Korea does not quickly ease the path for shipments of U.S. beef. Baucus, whose home state is a major beef exporter, has criticized South Korea for slamming the gates closed after mad-cow disease was discovered in the United States four years ago.

"This is an entirely unacceptable outcome," Baucus declared in a statement. "I will not allow it to move through the Senate, unless and until Korea completely lifts its ban on U.S. beef."

In a conference call with reporters, negotiator Karan Bhatia, who led the U.S. team, said he understood that the Korean government plans to reopen its market to U.S. beef when a new set of international standards on mad-cow disease is released in May.

"I don't think the Congress will approve a [free-trade agreement] with Korea without the full reopening of Korea's beef market," Bhatia said. "We have made that very clear to Korea, and I think Korea understands that."

Autos are another flashpoint. Last year, U.S. companies sold about 4,000 cars in South Korea, while Korean firms sold 800,000 cars in the United States, according to the Office of the U.S. Trade Representative.

Administration officials said the deal would give U.S. automakers a boost, immediately eliminating South Korean tariffs on foreign cars, which average 8 percent. U.S. tariffs on cars, which average less than 3 percent, would also be scrapped. The deal would replace a tangle of regulations that have curbed sales of foreign vehicles in South Korea.

But in an interview, Rep. Sander M. Levin (D-Mich.), who chairs a House subcommittee on trade, said he was dissatisfied with the auto provision and vowed to oppose the deal unless there are changes.

"They have to make sure there's real and assured market access for our products," he said.