March 27, 2007	Tuesday	Rabi-ul-Awwal 7, 1428

SEOUL, March 26: South Korea said on Monday it was prepared to walk away from a free trade agreement with the United States rather than make unacceptable concessions, as the two sides started a make-or-break final round of talks.

“After the first-day meeting, the prospects for a deal are still uncertain,” said Seoul's chief negotiator Kim Jong-Hoon.

“If the FTA fails to meet our expectations, or if the US side insists on demands that we cannot accept, such as rice concessions, we will resolutely deal with it, risking the breakdown of talks,” he told reporters.

The deadline for agreement is Friday, Washington time, but Kim said Seoul “will not be tied by the end-of-March deadline to conclude an unbalanced deal.” He said there had been little progress in narrowing differences after a “tense” first day.

Kim said South Korea, which is being pressed to open its auto sector wider to US vehicles, also wants US tariff cuts on its own vehicle exports.

Seoul sold more than 800,000 vehicles worth $10.8 billion in the United States last year, while US firms exported only some 4,000 vehicles the other way.

And South Korea is sticking to its demand that goods made in North Korea at a Seoul-funded industrial estate at Kaesong be included in the deal, something the United States has always rejected.

The stakes are high, with total two-way trade worth $74 billion last year. An agreement could boost this figure by about 20 per cent, according to some studies.

South Korea is pushing for a pact, despite strong protests from farmers and others, to try to make its economy more competitive to meet a growing export challenge from China.

For the United States, a deal would be its biggest since the 1993 North American Free Trade Agreement.

The US delegation chief, Deputy Trade Representative Karan Bhatia, declined comment on the negotiations but said “both sides are really working hard.” His opposite number is South Korean Trade Minister Kim Hyun-chong.

Bae Jong-Ha, South Korea's lead negotiator for agriculture, said rice -- the most sensitive farm issue -- had not yet been taken up as a formal agenda item, although US officials said last week they would raise it.

—AFP