By Kim Hyun-cheol
Staff Reporter

Korea and the United States will have to wait until after 2010 to get their free trade agreement (FTA) in place, if they fail to do so this year. To get it done this year, Seoul needs to take the initiative with an early ratification, which will put pressure on its counterpart, a leading business lobby said Saturday.

To avoid this, governments of both countries should make all-out efforts for the deal this year while local businesses also need to pan out various persuasive measures upon the American policymakers, the Federation of Korean Industries (FKI) said in a report.

Expected economic benefit from tariff cuts will decrease with late ratification of the South Korea-U.S. FTA (KORUS FTA), the report said.

Last year's prediction by 11 state-run institutions says the KORUS FTA will boost the nation's actual gross domestic product by 0.3 to 6.0 percent.

Korea's strategy of taking the advantage in growth through expanded cooperation with the United States will be also deterred by failing to secure new growth engines, it added.

All in all, the project is likely to be adrift for a certain period after the election, the FKI predicted.

Skepticism is growing on whether the FTA will be finalized this year as the Bush administration hopes, particularly with the U.S. presidential election getting closer.

The process of reshuffling after a new government is sworn in usually blurs project subject matter, all the more so in the event Barack Obama, the Democratic candidate, wins the campaign.

The report expected a ``strategic pause'' in trade and commerce field following Obama's inauguration. As domestic issues like the reform of the medical care system will take bigger priority, he might demand a whole new negotiation to the agreed pact in reflection of the interest of U.S. labor unions, it said.

The former senator of Illinois has criticized the trade pact several times. He sent Bush a letter in May and demanded the president not submit the ``badly flawed'' deal to Congress for a vote.

Terms of the pact ``fall well short of assuring effective, enforceable market access for American exports of manufactured goods and many agricultural products,'' Obama claimed.

To mitigate the counter effect, Korea needs to ratify the pact first to display its sincerity for it, as well as persuade the U.S. Congress to handle the issue during the lame duck session before it gets too late, the FKI suggested.

South Korea and the United States signed the FTA last year, the biggest trade pact for the United States since the North American Free Trade Agreement in 1994.

hckim@koreatimes.co.kr