Seoul Reserves Answering

US Bids Free-Trade Accord With Korea

The Unites States has suggested a free-trade agreement with Korea, under which the two nations would exempt each other’s goods from import duties, highly-placed government sources said yesterday.

The duty-free agreement has been a bilateral topic of the Korean and U.S. economic policymakers, especially since Amb. William E. Brock, U.S. Trade Representative, raised the issue to Deputy Premier-Economic Planning Minister Shin Byong-hyun this spring.

The government, however, has reserved its answering to the U.S. bid, which was expounded privately by Amb. Brock when he visited Seoul in April to attend an international trade forum.

Officials at the Economic Planning Board (EPB) said: “We can not give an immediate ‘yes’ or ‘no’ to the free trade proposal due to its unmeasured sensitivity to the Korean economy as a whole.”

The positive effect of the agreement is the total suspension of the U.S. protective measures against the Korean products, an enormous chance to boost Korean exports on the U.S. market.

Increasingly, exports of some Korean products including color TV sets have hit a snag because of anti-dumping acts and other American trade protective measures.

However, the duty-free agreement is certain to threaten the survival of the Korean agricultural industries. A tally shows that Korean farm products’ prices are three times higher than those of American goods on average.

For this reason, the government is not expected to enter a duty-free accord with the United States, the nation’s biggest trade partner, in the future.

“The unprecedented arrangement, however, deserves Korean consideration so long as Korea supports the free-trade principle,” said a ranking official at the EPB, who refused to be identified.

“In particular,” he went on, “it seems desirable for the two nations to enforce the free-trade arrangement on a gradual basis.”

His remarks may indicate the Korean willingness to negotiate with the United States on the arrangement on the condition that farm products and other ‘sensitive’ products are excluded in the list for free trade.

The United States will soon enter its first duty-free pact with Israel. To this direction, the U.S. Congress gave final approval on Oct. 9 to a trade bill. President Ronald Reagan has signed it into law, authorizing the president to negotiate with Israel the free-trade arrangement.

Some trade experts predicted that the agreement will be the forerunner of a series of multilateral duty-free arrangements with other U.S. trading partners such as Korea, Taiwan and Canada.

U.S. Commerce Secretary Malcolm Baldrige expressed the positive American stand for the prospective Korea-U.S. free-trade arrangement for their mutual benefit in the unprecedented teleconference between Seoul and Washington.