South Korea-US hold last-ditch trade talks

South Korea and the United States made last ditch-efforts Thursday to salvage a free trade agreement that has stalled because of differences over autos and imports of American beef

Trade chiefs from the two countries held an extra session of midnight negotiations ahead of a scheduled meeting between Presidents Barack Obama and Lee Myung-bak later Thursday, officials said.

"If we can reach the standard for a fair trade agreement that the president has set out on particularly autos, we will move forward," White House spokesman Jen Psaki said in Seoul. "We hope to continue making progress."

The two sides have been holding make-or-break negotiations to infuse new life into the deal to slash tariffs and other barriers to trade that was signed in 2007 when previous administrations were in power. It remains unratified by lawmakers in both countries.

Progress has been slowed by U.S. demands that South Korea reduce its surplus in auto trade and further open its market for American beef. The global financial crisis in 2008 and recession that followed also sapped momentum.

The White House says the deal could add at least $10 billion to U.S. gross domestic product and boost exports to South Korea by $10 to $11 billion a year. It would be the largest U.S. trade deal since a 1994 agreement with Canada and Mexico.

Obama, who arrived in Seoul on Wednesday for a summit of the Group of 20 major economies, said in June he wants to send the free trade agreement to U.S. lawmakers within a "few months" after his summit with Lee.

"Failure cannot be an option," Thomas Donohue, president of the Washington-based U.S. Chamber of Commerce, told a meeting of the local American Chamber of Commerce in Korea on Wednesday.

Leaving the agreement unratified would cost U.S. jobs and exports as the European Union and individual countries implement free trade deals with Seoul, he said.

U.S. businesses have warned that the U.S. risks losing out to rivals, including the European Union which signed a free trade agreement with South Korea last month. They are aiming to have it take effect in July of next year.

South Korea, which has been aggressive in pursuing such deals, also has trade pacts in effect with India, the 10-member Association of Southeast Asian Nations and other countries.

Figures compiled by auto industry groups in South Korea show that it exported 449,403 vehicles to the U.S. last year, while South Koreans purchased 6,140 vehicles made by American manufacturers based on vehicle registrations.

Those figures do not include the 200,371 vehicles sold in the U.S. last year by Hyundai Motor Co. that were made at its American plant nor the 114,845 sold in South Korea by GM Daewoo Auto & Technology Co., the South Korean unit of General Motors Co.

The U.S. auto market is about 10 times bigger than South Korea's. There were 10.4 million vehicles sold in the United States last year. There were about 1.4 million sold in South Korea in 2009, according to the Korea Automobile Manufacturers Association.

South Korea halted imports of American beef after a Canadian-born cow infected with mad cow disease was discovered in the U.S. in 2003. Seoul eventually agreed to resume imports, but huge street demonstrations in response forced the government to backtrack and limit shipments to younger cows considered less at risk. The U.S. says its beef is safe.

Bilateral trade between South Korea and the U.S. totaled $66.7 billion in 2009, down sharply from $84.7 billion in 2008 as global commerce suffered during the economic downturn.

Peter Roskam, a member of a bipartisan working group in Congress committed to passing the free trade agreement, said he is optimistic the negotiations will succeed.

"I think there's an urgency to this," Roskam, a Republican from Illinois, said in Seoul.

He said the agreement will have an easier time getting ratified "if the auto issue and the beef issue are dealt with in a satisfactory manner."

He said the South Koreans have a history of being tough negotiators until the 11th hour. "That doesn't mean they (the remaining issues) can't be nailed down in a very, very short time," he said.