Seoul denies report on FTA talks with Beijing

SEOUL, July 8 (Yonhap) -- South Korea denied a local media report Friday that it has agreed with China to launch negotiations for a bilateral free trade agreement (FTA) within this year. "There are still differences on when and how the two countries start negotiations, although both sides share views that a bilateral free trade deal is necessary," the ministry said in a statement. The denial came after the vernacular daily JoongAng Ilbo reported that Seoul and Beijing will later in the day sign a memorandum of understanding (MOU) for the launch of their FTA talks within this year. The media also said the two countries may adopt a so-called early harvest program in launching their FTA negotiations, which is designed to offer preferential tariffs on some non-sensitive goods. In South Korea, there are growing calls for an FTA with Beijing as a similar trade deal between China and Taiwan has recently taken effect. But there are also concerns that under a free trade pact with China, South Korea's agriculture and some other segments would be severely hit by an influx of cheap goods from the neighboring country. South Korean President Lee Myung-bak said last year that Seoul needs to consider an FTA with Beijing in order to keep up with other nations that have been adjusting to trade conditions stemming from China's rapid rise in the global economy. China is the largest buyer of South Korean-made goods and has contributed to Seoul's sizable trade surplus in recent years, while South Korea is China's third-largest trading partner after the United States and Japan. Their bilateral trade reached US$188.4 billion last year. Both countries are expecting the volume to top $300 billion in 2015, the ministry said. The two countries completed a nearly four-year joint feasibility study on a possible bilateral FTA in May of last year and reached an agreement to exchange their views on sensitive issues. According to the report compiled by the Samsung Economic Research Institute, South Korea's gross domestic product is expected to grow 2.72 percent more if Seoul and Beijing complete an FTA intended to cut or remove tariff barriers between the two countries.