Struggling free trade talks between the United States and its long-time ally South Korea hit a new snag on Wednesday over US anti-dumping laws, which Seoul believes are unfairly applied to its products.
South Korea's chief negotiator Kim Jong-hoon said Seoul suspended talks in that area after Washington balked at its requests for reforms. Seoul also cut off talks on automotive trade and pharmaceuticals, where the United States is pushing South Korea hard for market-opening concessions, he said.
Meanwhile, chief US negotiator Wendy Cutler criticised Seoul for rejecting another cargo of US beef and warned South Korea must fully reopen that market if it expects to win US congressional approval of trade pact when it is done.
Earlier this year, South Korea reopened its market to boneless US beef - but not bone-in beef - for the first time since December 2003, when a case of mad cow disease was found in the United States. South Korea has infuriated US cattle producers and Bush administration officials by rejecting all three cargoes sent since the partial reopening.
"Now we're up to three shipments that have been rejected by Korea on the grounds that they found tiny pieces of bone fragments in these shipments," Cutler said. "While ... this topic is technically separate from the FTA (free trade agreement) negotiations, it's on my mind all the time." South Korea, the United States' seventh-largest trading partner, is generally on the defensive in the talks.
Washington is demanding Seoul tear down barriers in heavily protected sectors like agriculture and autos and revamp its national health system to allow in more US prescription drugs.
Seoul's demands include reform of anti-dumping and countervailing measures, which the United States often has used to hike duties on South Korean steel exports in response to US industry complaints of unfair pricing.
US steel producers and their defenders in Congress complain about any changes in anti-dumping laws just as loudly as South Korean farmers protest any opening of the country's highly protected rice market.
"This is one of the most sensitive areas for the United States in the FTA (free trade agreement) negotiations. We have not said that we are unwilling to discuss these issues. We have also made it clear that we have limited flexibility on what we can do in this area," Cutler told reporters.
A final deal with South Korea is still possible by early next year, but "we have our work cut out for us," Cutler said. Kim compared the negotiations to a fruit that needs more time to ripen. Although many issues remain, the talks have made "significant progress" since they began in June, he said.
The two sides are under pressure to reach a deal by late March so it can be sent to Congress before US trade promotion authority expires. That legislation requires lawmakers to approve or reject the trade pact without making any changes.
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