US, South Korea sign trade pact with labour, environment shields

After a year of negotiations and an eleventh- hour concession by Seoul, South Korea and the United States on Saturday signed a free trade agreement (FTA) that removes nearly all tariffs on commodities, except rice. US Trade Representative Susan C Schwab and South Korean Trade Minister Kim Hyun-chong met in the caucus room of the landmark Cannon Office Building, the oldest congressional office building constructed in 1908, to seal the agreement.

For the US, the pact is the largest trade treaty since the 1994 North American Free Trade Agreement (NAFTA), which Washington signed with Mexico and Canada.

Washington and Seoul were under pressure to wrap up their trade pact before Saturday's expiration of Bush's "fast-track" trade authority, which allows his administration to negotiate trade deals and allows Congress only a yes or no vote without making amendments.

Seoul made last-minute concessions on Friday to tougher labour and environmental standards that were insisted upon by the new Democratic-controlled US Congress.

South Korean Prime Minister Han Duck-soo said Friday that the FTA "may not be endorsed by the US Congress" if the amendments were not incorporated into the pact negotiated by the administration of Republican President George W Bush.

The agreement will now go to the two countries' legislatures for final approval.

The deal discards almost 90 per cent of each side's tariffs on industrial goods, while all remaining tariffs are to be phased out over three to 15 years.

Rice was excluded in the deal over concerns raised by South Korean farmers, often during violent protests. In 2005, two people died in clashes and 60 people were injured last year.

Earlier this year, a taxi driver set himself on fire outside the hotel where negotiators were meeting. He was treated for third-degree burns.

The agreement could boost US exports to South Korea by 19 billion dollars, and South Korean trade to the US by 10 billion dollars, the US International Trade Commission has estimated.

US officials have said the deal is good for America's farmers and ranchers who will gain duty-free access to Korea's market of 48 million people for a large range of products including wheat, feed corn, hides, cotton, nuts, some fruits, and bourbon whiskey.

The agreement opens up Korea's auto market to US cars and only expands access for beef and pork products, pears, apples, grapes and oranges.

South Korea is the world's 11th-largest economy and the seventh- largest trading partner of the US. Both sides expect the FTA to boost two-way trade, which stood at more than 70 billion dollars last year.