The U.S. Trade Representative (USTR) in its annual trade report for 2008 released Friday named better auto market access in South Korea as one of the key priorities for the U.S. government.

The report, officially called the National Trade Estimate (NTE), also expressed concerns about what it describes as South Korean government subsidy assistance to targeted industries.

"The United States has urged the Korean government to eliminate Korea's 8 percent tariff on imported automobiles, which is more than three times the U.S. tariff, and eliminate discriminatory elements of Korea's engine displacement taxes," the report said.

The U.S. is also urging South Korea to create a formal consultative mechanism to discuss regulatory and standards issues to promote transparency, it said. "In addition, the U.S. government continues to urge the Korean government to address
specific issues of concern in the area of automotive emissions and safety standards."

The auto sector is one of the major sore points for U.S. legislators and industry leaders who oppose the South Korea-U.S. free trade agreement signed in June last year. The pact awaits legislative approval in both countries, but U.S. opponents argue that the automobile section must be re-negotiated to rectify a heavy trade imbalance in Seoul's favor.

The 2008 NTE points out that many of the issues mentioned in the report are addressed by the FTA provisions.

On the beef market, another contentious issue hampering FTA approval in the U.S., the report said it continues to work with Seoul to fully reopen its market to all American beef and beef products, regardless of cattle age.

South Korea had banned all imports after a mad cow disease scare in late 2003. The restrictions were partially lifted to allow in boneless beef from cattle less than 30 months of age.

Although beef is not an FTA agenda, some congressmen have linked their FTA approval to Seoul's full market opening.

The report pointed to a South Korean industrial subsidy policy that raises competitiveness concerns.

"Korea's past promotion and support for its semiconductor industry that eventually resulted in the imposition of countervailing duties by the United States... is emblematic of concerns in this area," it said.

The role of the Korea Development Bank (KDB) in supporting certain industries is also of concern to the U.S., said the report: "U.S. industries have reported that lending and equity investments by the KDB have contributed to overcapacity in certain Korean industries and have allowed Korean companies to compete unfairly with U.S. companies."

The annual report said access to the South Korean rice market has "improved significantly," with the U.S. getting 26.9 percent of the Asian country's minimum market access imports in 2007, valued at US$52 million.

This is the highest level of U.S. rice exports since South Korea assumed its minimum market access obligations in 1995, the report said. (Yonhap