U.S. trade talks with South Korea came down to the wire over the weekend before reaching a landmark deal late Sunday, marking the biggest U.S. free-trade agreement in 15 years.
The negotiations, which began 14 months ago, reportedly continued for 48 hours past the initial deadline, with automotive and rice tariffs as the main points of contention.
In a photo finish, the two sides compromised on a food dispute, while South Korea agreed to drop tariffs and other restrictions on imported cars. The U.S. will scrap a smaller tariff on Korean trucks.
The agreement calls for Seoul to eliminate an 8% tariff on vehicle imports, as well as non-tariff taxes and regulations.
The deal promises U.S. auto makers a level playing field in Korea, where only 3.5% of cars sold there last year were foreign made, compared with 37% in the U.S., The Wall Street Journal reports.
Earlier media reports quote U.S. Trade Representative Susan Schwab as saying the U.S. would not conclude a free-trade pact with South Korea until the country agreed to dismantle “layer after layer after layer” of barriers to U.S. auto imports.
The new pact reportedly allows the U.S. to slap duties on South Korean goods if Seoul fails to meets its commitments in the automotive sector. Korea is the world’s ninth-largest auto market and the U.S.’ seventh-largest trading partner.
U.S. auto makers have complained that despite two agreements signed in the 1990s to open the Korean market, the American companies only sold about 4,000 cars in the country last year, while South Korea shipped 800,000 to the U.S.
The complete draft of the trade agreement reportedly is expected to take up to two weeks following meetings with trade lawyers and translators. The next challenge will be for President Bush and South Korea President Roh Moo-hyun to get approval from leaders in their legislative bodies.