US sees gains from US-Korea trade pact

A proposed free trade deal with South Korea would add between $10 billion and $12 billion to the US economy, giving a special boost to clothing, chemicals, machinery, meat and food exports, a government report found.

The US-South Korea bilateral trade deal, signed by the Bush administration earlier this year and awaiting congressional approval, would boost goods exports by up to $10.9 billion, and also would help services trade, the US International Trade Commission said.

The largest US free trade agreement in more than 15 years would have only a negligible effect on US employment and the overall US economy, which totals about $13 trillion, the ITC said.

Imports of goods from Korea are expected to grow by $6.4 billion to $6.9 billion under the agreement, the ITC said.

"Farmers, ranchers, manufacturers, and service providers in every state will benefit from deeper and stronger trade and investment ties with this key Asian ally," Trade Representative Susan Schwab said in a statement.

But there is resistance in Congress. A number of senior Democratic lawmakers, including House of Representatives Speaker Nancy Pelosi and presidential contender Senator Hillary Clinton of New York, have promised to oppose the pact, which they say sells short in already troubled auto industry.

The ITC study estimated large gains in the value of passenger car imports from South Korea, "but small in percentage terms."

About 55-57 per cent of the increased car imports from South Korea would be diverted from other foreign suppliers, the study said.

US passenger cars exports to South Korea could increase by "a large percentage" under the pact, but starting from a low level and depending on how effectively Seoul reduces non tariff market barriers as a result of the pact, the ITC said.

Another obstacle to congressional approval is South Korea's position on US beef imports. The deal faces defeat unless Seoul agrees to accept all US beef products, which has not occurred since mad cow disease was discovered here in 2003. The pact would cuts duties significantly - making 82 percent of US tariff lines and 80 per cent of Korean tariff lines duty-free right away. Ten years out, 99 per cent of US lines would go without duties and 98 per cent of Korean lines.

It expects the biggest output and employment increase would go to the bovine meat sector and feeder industries, as much as 2 per cent. Wheat, textiles, apparel and electronic equipment could be hit, but by generally less than one per cent.

US agriculture would enjoy major benefits in the pact, the ITC said, as it sees an end to high tariffs and other barriers. US exports of meat, grains, oilseeds, animal feeds, fruit and vegetables, and other food were expected to grow.