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updated: 8/13/2011 1:57 PM

South Korea, China considering free trade agreement

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Bloomberg News

South Korea and China are considering starting negotiations for a free trade agreement to increase the export of goods and services between the two countries, South Korean Trade Minister Kim Jong Hoon said.

"This can be a win-win," Kim said late yesterday in Manado, Indonesia, where he attended a meeting of Association of Southeast Asian Nations trade ministers. "Certainly there are sensitivities on the part of Korea and on the part of China. Now we are talking about how we can take care of these sensitivities mutually. Then, we can expedite going into negotiations."

Asian nations are seeking to increase trade among themselves and with partners to lessen their reliance on the U.S., as the world's largest economy falters. Malaysia expects to conclude trade agreements with Turkey this year and with the European Union and Australia in 2012, International Trade and Industry Minister Mustapa Mohamed said this week.

China is South Korea's largest trading partner with total volume between the two nations reaching $180 billion in 2010, Kim said. South Korea is "very close" to reaching a free trade agreement with the U.S. and is negotiating free trade arrangements with other countries including Australia, Turkey, Colombia, and Canada, he said.

South Korea is awaiting the ratification of the free trade accord by the U.S. Congress before its own lawmakers approve the deal, Kim said. The agreement will benefit South Korea's chemical, petroleum products and electronics manufacturers including LG Electronics Inc. and Samsung Electronics Co., while hurting pork, milk, cheese and cattle producers, he said.

South Korean President Lee Myung Bak's government will spend $20 billion over the next 10 years to help farmers compete by modernizing techniques and upgrading their skills, Kim said.