Friday January 2, 2009

South Korean MPs fail to end impasse on U.S. trade deal

By Jon Herskovitz

SEOUL (Reuters) - Leading South Korean MPs failed on Friday to end an opposition protest that has paralysed parliament for weeks, delaying voting on a U.S. trade deal and reforms aimed at boosting Asia's fourth-largest economy.

A woman is seen walking past the Seoul city hall covered by a huge South Korean national flag made of about 27,000 plastic balls in this August 12, 2008 file photo. (REUTERS/Jo Yong-Hak/Files)

The ruling Grand National Party (GNP) has been thwarted in its attempt to push through the trade deal, sweeping tax cuts and plans to privatise state-run firms by opposition lawmakers who have occupied the main parliament chamber, committee rooms and the speaker's chair to physically block voting.

The GNP, which has a majority, has floated delaying the vote on the trade deal in return for quick passage of the reforms.

But in a sign of the difficulties in reaching a deal, a meeting of GNP and opposition leaders broke down shortly after it began due to a dispute over the membership of the delegations. The groups said they were keeping contact channels open.

The GNP has outlined 85 bills it wants to pass that also include measures to ease bank ownership, give debt-relief to low income households and revamp the broadcast industry.

President Lee Myung-bak, who is from the GNP, called on MPs to move on the reform agenda to help the export-driven economy steer through the global financial crisis.

"If they do, we will be able to put further spurs to ongoing efforts to revitalise the economy and create jobs, which is the hope of all Koreans," Lee said in a New Year's message.

"EVERYBODY A LOSER"

South Korean exports and imports shrank more than expected in December as the global economic crisis shredded demand at home and abroad. The government said exporters faced their toughest year since 2001.

"At the first glance everybody seems to be coming out as a loser because the public is just getting fed up," said Choi Han-soo, a political science professor at Konkuk University.

But the more the parties dig in their heels, the more support they receive from their political bases, which could make the struggle protracted, he said.

South Korea's parliament ground to a halt after opposition MPs swinging sledgehammers on Dec. 18 tried to force their way into a committee meeting room to halt the introduction of the bill to ratify the trade deal with the United States.

South Korea and the United States struck the deal in 2007 that studies said would boost their $78 billion a year in two-way trade by about $20 billion. The pact has not been approved by legislatures in either country.

The dynamics in Washington will change this month when President-elect Barack Obama takes office and what is seen as a more protectionist Congress is seated. Obama has said parts of the deal, such as auto trade, need to be renegotiated.

South Korean analysts said it may take six months or more for Congress to take up the FTA, the largest bilateral trade deal the United States has struck in about 15 years. And there is more pressure to revise the auto trade section due to the precarious financial position of the Big Three U.S. carmakers.

(Additional reporting by Kim Junghyun)

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