By Todd Bullock
Washington File Staff Writer

Washington - The United States and South Korea will open negotiations on a comprehensive bilateral free-trade agreement (FTA) to remove tariff and non-tariff barriers and expand trade between their countries, according to Bush administration officials.

"A Free Trade Agreement with the Republic of Korea will provide important economic, political, and strategic benefits to both countries and build on America's engagement in Asia," President Bush said in a statement released by the White House February 2.

At a press conference the same day, U.S. Trade Representative (USTR) Rob Portman and South Korea's Minister of Trade Hyun-chong Kim announced the two countries would begin FTA talks around May after a consultation period.

If completed, a U.S.-South Korea FTA would be the largest U.S. free-trade pact since the North American Free Trade Agreement (NAFTA) of 1994.

"This is the most commercially significant free trade negotiation we have embarked on in 15 years," Portman said. "Korea is the world's10th largest economy with an annual GDP rapidly approaching $1 trillion and our 7th largest export market."

Two-way goods trade between the United States and Korea was valued at about $72 billion in 2005, according to the USTR.

Major U.S. exports to Korea include agriculture products, aircraft, machinery and organic chemicals.  Major imports include autos, telecommunications equipment and electrical machinery.

ECONOMIC REFORM IN SOUTH KOREA

"South Korea has also taken a series of important steps to open and reform its economy," the USTR said, adding an FTA with the United States will help promote "continued economic reform."

One example of this trend toward more open markets is Seoul's January 26 announcement that the quota for domestic films at local cinemas would be reduced from 146 days a year to 73 days a year as of July.   This decision provides cinemas with more opportunities to show foreign films.  (See related article.)

"The United States and the Republic of Korea have a strong alliance and are bound together by common values and a deep desire to expand freedom, peace, and prosperity throughout Asia and the world," Bush said.

A U.S.- South Korea FTA also advances our commitment to opening markets and free trade, he continued.

OTHER BILATERAL TRADE AGREEMENTS

The United States recently signed an FTA with Oman in January and currently completed the sixth round of FTA talks with Thailand.

The United States currently has FTAs with Jordan, Chile, Singapore, Australia and Morocco and has completed negotiations on FTAs with Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Bahrain, Oman and Peru. Negotiations are under way or about to begin with 11 more countries:  Panama, Colombia, Ecuador, Thailand, the five nations of the Southern African Customs Union (SACU), and the United Arab Emirates. (See related article.)

In the Asia-Pacific region, the United States currently has Trade and Investment Framework Agreements (TIFA), with Indonesia, Malaysia, Brunei Darussalam, the Philippines and Thailand.  TIFAs address specific trade problems and help trading partners develop the experience, institutions and rules that advance integration into the global economy, creating momentum for liberalization that, in some cases, can lead to an FTA, according to the State Department's Bureau of Economic and Business Affairs.

For additional information on U.S. policies, see East Asia and the Pacific and Trade and Economics.

The text of Bush's statement is available on the White House Web site.