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South Korea upbeat on resolving U.S. trade deal soon


President Barack Obama (C), South Korean President Lee Myung-bak (2nd L) and Canadian Prime Minister Stephen Harper (rear L) are pictured with the winners of the G20 SME Finance Challenge Award at the G20 Summit in Seoul November 12, 2010. REUTERS/Jason Reed
President Barack Obama (C), South Korean President Lee Myung-bak (2nd L) and Canadian Prime Minister Stephen Harper (rear L) are pictured with the winners of the G20 SME Finance Challenge Award at the G20 Summit in Seoul November 12, 2010. REUTERS/Jason Reed

By Jack Kim

SEOUL (Reuters) - South Korean officials struck an upbeat note on Friday that talks to iron out U.S. concerns about a free trade deal signed three years ago would conclude soon despite missing a deadline set by their leaders.

But there was concern that outstanding differences on the autos and beef trade that hampered progress on the deal could take months, if not another several years, to resolve.

"The differences have been narrowed through the tireless discussion at various levels and we are very hopeful of resuming talks and reaching a mutually agreeable resolution within the next few weeks," South Korea's ambassador to the United States, Han Duk-soo, told Reuters.

The two sides failed to revive the stalled deal on Thursday when President Barack Obama and President Lee Myung-bak met on the sidelines of a G20 summit in Seoul, dealing a setback to a longstanding effort to boost trade.

The deal, if ratified by the two countries' assemblies, would be one of the largest free trade pacts ever and the largest signed by the United States since the North American Free Trade Agreement with Canada and Mexico that went into effect in 1994.

Studies say the deal would boost the $66.7 billion in annual two-way trade by as much as 25 percent.

South Korea's automakers stand to gain with much greater access to the U.S. market. U.S. farm products and machinery are also expected to be winners.

Trade envoys meeting since last week could not conclude negotiations to resolve U.S. industry and lawmakers' concerns that the deal does not do enough to open South Korea's market to U.S. autos and beef.

At the end of the G20 summit and before his short flight to Japan for the fourth leg of his Asia tour, Obama said he wanted to get the deal right and the two sides were close to it.

"I am not interested in an announcement and then an agreement that doesn't produce results for us. We've had a lot of those in the past," Obama told reporters.

"Understandably, I think there's a lot of suspicion that some of these trade deals may not be good for Americans. I think this one can be."

The concerns raised by U.S. lawmakers have been the primary reason holding up deliberation by Congress.

South Korea's parliament has introduced the bill to the floor but discussions stalled pending movement in Washington. There is a broad support for the deal in Lee's ruling Grand National Party, which controls the unicameral house.

BEEF COULD CHOKE DEAL

Assistant U.S. Trade Representative Wendy Cutler met South Korea's chief free trade negotiator on Friday in a three-hour session seen as coordinating discussions in weeks ahead.

"We had the presidents pledging their commitment yesterday to continued discussions, so (the officials) are meeting to coordinate, rather than getting right into in-depth talks," a South Korean Trade Ministry official said.

Cutler declined to answer questions as she left the office of Deputy Minister for Trade Choi Seok-young.

Kwon Young-min, an expert on free trade negotiations at Myongji University in Seoul, said if autos were the only sticking point, then a deal could be in reach. But any insistence by Washington to take up the issue of South Korea's restrictive import of U.S. beef would mean more complications.

"Beef is a very serious issue, something that President Lee will be unable to give away even if he wanted to, given the incredible impact of what he went through two years ago," Kwon said.

In 2008, Lee's then months-old administration was thrown into paralysis because of big street protests after he accepted U.S. demands for greater beef market opening.

The two sides later struck a "voluntary private sector agreement" banning the import of beef from cattle older than 30 months, which are considered to pose a greater risk of mad cow disease.

Some U.S. lawmakers want South Korea to commit to a complete reopening of the market before the pact is approved.

But U.S. beef exporters called on Friday for quick action on the pact, saying they were encouraged by a 175 percent increase in sales to South Korea in January through August, compared with the same period in 2009.

"If we do not pass this agreement soon, our export opportunities may be at risk to competitors like Australia, who are actively negotiating agreements with Korea as we speak," American Meat Institute President Patrick Boyle said.

The group estimates the deal, by phasing out steep South Korean tariffs on U.S. beef, could generate an extra $2.3 billion in U.S. exports and create nearly 30,000 jobs.

(Additional reporting by Doug Palmer in Washington and Patricia Zengerle in Seoul; Editing by Jeremy Laurence and John O'Callaghan)

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