U.S. and South Korean negotiators struck the world's largest bilateral free trade agreement on Monday, giving the United States a badly needed lift to its trade policy at home and South Korea a chance to reinvigorate its export economy.
Negotiators announced the agreement, the culmination of a 10-month effort.
"This is a strong deal for America's farmers and ranchers, who will gain substantial new access to Korea's large and prosperous market of 48 million people," Karan K. Bhatia, the deputy U.S. trade representative, said in Seoul on Monday .
"Neither side obtained everything it sought," he added.
If ratified, the trade deal would eliminate tariffs on more than 90 percent of the product categories traded between the countries. South Korea agreed to lift trade barriers to important American products like cars and beef, while the United States agreed to allow Seoul to continue to subsidize South Korean rice.
The agreement is a significant victory for the Bush administration, which needed a prominent deal with clear benefits for American producers to shore up support for bilateral trade pacts with Panama, Peru and Colombia, which have thus far received a cool reception from a skeptical Congress.
Free trade between the United States and South Korea — the world's largest and 11th-largest economies, respectively — could give American companies an important stronghold in Asia, where they have steadily ceded market share to European, Japanese and Chinese competitors.
The deal may also prompt a wave of bilateral trade pacts as an alternative to stalled multilateral negotiations under the World Trade Organization, economists said Monday.
As South Korean workers and farmers protested in the streets — on Sunday, one man even set himself on fire — negotiators haggled to the end early on Monday.
The breakthrough came when both sides compromised on the most delicate deal-breaking issues. Washington dropped its demand that the South Korean government stop protecting its politically powerful rice farmers, and Seoul agreed to resume imports of American beef, halted three years ago over fears of mad cow disease, if, as expected, the World Organization on Animal Health declares U.S. meat safe in a ruling next month.