U.S.-Korea free trade pact takes effect amid controversy

WASHINGTON (Reuters) - A U.S.-South Korea free trade pact that has stirred controversy in both countries since it was negotiated took effect on Thursday with opposition politicians in Seoul vowing to block parts of the deal they don't like.

"The U.S.-Korea agreement is a landmark deal with an important ally," U.S. Trade Representative Ron Kirk said in a statement hailing the accord as the most significant U.S. free trade pact in 20 years.

"Starting today, Korea's doors are wide open for Made-In-America exports that will support well-paying jobs here at home," Kirk said.

U.S. President Barack Obama and South Korean President Lee Myung-bak spoke by phone on Tuesday "to welcome the entry into force of the U.S.-Korea Free Trade Agreement (KORUS) at midnight on March 15 in both countries," the White House said in a statement.

The pact, which was signed in 2007 and finally approved by both countries in late 2011, immediately eliminates 80 percent of South Korea's duties on U.S. manufactured goods and nearly two-thirds of its duties on U.S. farm products.

South Korea is the United States' seventh-largest trading partner and has an economy valued at $1 trillion dollars. The pact's tariff cuts are expected to boost U.S. exports to Korea by $10 billion to $11 billion, helping to support 70,000 jobs.

The agreement mostly negotiated by the administration of former U.S. President George W. Bush and former South Korean President Roh Moo-hyun also opens up more of South Korea's large services market to U.S. companies and has new protections for exporters, investors, and intellectual property rights holders.

Lee's decision shortly after taking office in 2008 to reopen South Korea's market to U.S. beef triggered massive protests that caused the new president's popularity to plummet.

Within the United States, opposition from Obama's fellow Democrats prompted Obama to renegotiate the deal in late 2010 to get a better deal for U.S. automakers.

Ford Motor Co. and union groups complained the original pact failed to tear down longstanding "non-tariff" barriers to South Korea's auto market.

Once finally submitted to Congress, the pact sailed swiftly through both the House of Representatives and Senate.

Lee's party rammed the agreement through the South Korean parliament in November, despite an attempt by an opposition lawmaker to disrupt the vote by detonating a tear gas canister.

In February, nearly 100 South Korean parliamentarians, mostly from the opposition party, wrote to President Barack Obama to urge him not to implement the agreement without making a number of changes first, particularly in the section governing bilateral investment disputes.

"If our cordial and earnest request would be overlooked by your administration, we would have to take all measures possible to freeze implementation of the KORUS FTA, as we are expected to gain a majority of seats in the National Assembly in the coming (April 11) general elections," the lawmakers said.

Expecting their candidate also to win the South Korean presidential election in December, the lawmakers warned "the agreement would be subject to termination" if not revised by then.

Jeffrey Schott, an senior fellow at the Peterson Institute for International Economics, said he doubts the Korean opposition party will carry through on its threats.

Public Citizen's Global Trade Watch has accused Obama of rushing implementation of the pact to "cement" it into place before South Korea's opposition party takes power.

(Editing by Eric Walsh)

Source: http://news.yahoo.com/u-korea-free-trade-pact-takes-effect-amid-040323760.html

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