WASHINGTON, Jan 4: US farmers would be the biggest beneficiaries of a free trade agreement with South Korea, but the American textile industry could take a hit, a US government analyst said on Saturday.

Overall, the estimated effects are modest, but positive, for both countries, Christine McDaniel, an international economist at the US International Trade Commission, said in remarks prepared for delivery at an economics conference.

Although the Bush administration has embarked on a series of free trade negotiations with countries around the world, it has shown little interest in adding South Korea to that list.

But at the request of the Senate Finance Committee, the commission conducted a study on the economic impact of a bilateral free trade agreement with Seoul, McDaniel said.

South Korea is the United States’ seventh-largest trading partner, with two-way trade totaling $57.4 billion in 2001.

The International Trade Commission estimated that eliminating tariffs between the two countries would boost U.S. exports to South Korea by 54 per cent within four years, while South Korean exports to the United States would increase by 21 per cent.

Textile, apparel, leather goods and some manufacturing are sectors with the largest potential for Korean exports to the United States, while the largest gains for US exports to Korea are anticipated in agriculture, McDaniel said.

In particular, US beef and cheese exports to South Korea could increase by as much as 60 per cent if current high tariffs were eliminated, the commission’s study found.

At the same time, eliminating tariffs on South Korean textiles, apparel and leather goods could cut US production in those areas by 1.4 per cent, the study said.

The impact on each country’s overall trade would be far less significant than the increase in bilateral trade.

Overall, US imports and exports would rise only about 1 per cent, while South Korea’s exports and imports would increase by 4 per cent and 6 per cent respectively, McDanielsaid.

The commission’s study did not fully account for the removal of certain “nontariff” trade barriers, which often do more to restrict trade than tariffs, she said.

US companies have long contended that South Korean regulations, labeling and testing requirements, are the biggest obstacle they face in expanding sales.

At the same time, South Korean firms complain the United States has been quick to impose anti-dumping duties and similar measures to keep out their products.—Reuters