The United States cannot agree to South Korea's request for a free trade pact between the two countries to include goods made in an industrial park in North Korea, the top US trade official said on Friday.
"It won't happen, can't happen," US Trade Representative Susan Schwab said in an interview taped for C-Span television's "The Newsmakers" that was set to air on Sunday. "That won't change."
Seoul sees the Kaesong industrial park as a model for the eventual reunification of the two Koreas. About 6,000 North Koreans are employed in the pilot project, which began in June 2003 and includes 15 South Korean companies. The United States and South Korea began negotiations on the free trade pact in June and plan to hold their third round of talks next month in Seattle.
Dubbed KORUS, it would be the biggest US free-trade deal since NAFTA, the North American Free Trade Agreement, which took effect in 1994. Schwab did not elaborate on US objections to include goods from the park, but the United States has had extensive economic sanctions on North Korea dating back to the 1950s.
The Bush administration and many lawmakers in Congress have opposed any loosening of those sanctions because of North Korea's nuclear weapons program and other concerns. A recent report by the Washington-based Institute for International Economics described Seoul's request to include Kaesong as a "high-cost, low-payoff addition to the negotiating agenda ... that could put the entire initiative in jeopardy."
More broadly, Schwab said she remained hopeful the United States could finish free trade negotiations with South Korea as well as Malaysia by the end of the year, although "there's never a guarantee you're going to get them done." Schwab said she would meet with her South Korean and Malaysian counterparts next week when she travels to Asia.
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