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Obama mulling more demands on Korea in trade talks

By Doug Palmer

WASHINGTON (Reuters) - President Barack Obama told congressional critics of a free trade deal with South Korea he would consider asking Seoul for changes to labor, investment and financial provisions of the pact to help win approval of the deal in Congress, a lawmaker said on Thursday.

"He wanted us to give him a list of what our other concerns were," Representative Michael Michaud, a Maine Democrat, told Reuters after he and eight other lawmakers met with Obama.

Obama said he "is willing to go over that list and see which ones they agree with, and the ones that they do (agree with) they'll try (to pursue) when they continue the negotiations with the Koreans," the Maine Democrat said.

But Michaud, who is chairman of the House of Representatives Trade Working Group, said also Obama made clear finalizing the trade deal was a priority and "he definitely does not want to start from scratch" to get that done.

Obama's conversation with Michaud and his colleagues reflects the political problems he faces in embracing the Korea-U.S. Free Trade Agreement, which the two countries signed three years ago when George W. Bush was president.

For many Democrats, the pact is based on a "bad template" that Bush used to negotiate a raft of trade deals during his eight years in office, Michaud said.

U.S. and South Korean negotiators plan to resume talks soon on the trade deal in Washington, following their failure to resolve beef and auto trade issues during Obama's recent trip to Seoul for the Group of 20 summit.

Michaud said his group told Obama "we're willing to work with him on Korea and other trade deals, but we have very serious concerns beyond autos and beef ... We have issues with labor, investment and financial chapters ."

An extended list of U.S. demands could complicate chances of quick agreement on the deal, and Michaud acknowledged they had to be "realistic" about what more Obama could get.

STICKING POINTS

Despite the setback at the G20, U.S. business have tried to remain optimistic that a deal is still possible and could be sent to Congress for approval early next year.

Tami Overby, president of the U.S.-Korea Business Council, said Deputy Trade Representative Demeterios Marantis told her on Wednesday he still believes it is "matter of days and weeks" before a deal is sealed.

Obama and South Korean President Lee Myung-bak set the G20 deadline for resolving differences about the pact, which was signed by the countries in June 2007 but never ratified.

The sticking points mainly involve U.S. auto industry concerns that the pact does not do enough to tear down South Korean regulatory barriers blamed for low U.S. car sales while phasing out remaining U.S. tariffs on South Korean vehicles.

The United States also is looking for assurances outside the agreement that South Korea's market will remain open to U.S. beef and continue to grow, after a number of trade disruptions in the past decade.

South Korea conceded on Thursday some changes may be needed to the pact but said any revisions would be limited.

"It is not full-fledged negotiations. What is inevitable is we need negotiations on a very limited scale to give and take what each side needs," South Korea's deputy minister for trade, Choi Seok-young, said in Seoul.

The United States wants a slower phase-out of tariffs on South Korean cars and U.S. industry fuel economy and emissions standards to be automatically recognized in South Korea.

Choi said any change to the tariff phase-out schedule will have to involve changes to the text itself and is therefore unacceptable as a matter of principle. But he left open the possibility for discussions.

(Additional reporting by Jack Kim in Seoul; Editing by John O'Callaghan and Cynthia Osterman)

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