The fourth round of US-South Korea free trade agreement (FTA) negotiations
kicked off on 23 October. Preliminary reports from the talks, which are set to
run to the end of the week, indicate continuing disagreements over
agriculture, automobiles, and textiles. The two countries did agree to step up
discussions on pharmaceutical trade, which have proved contentious thus far
(see BRIDGES Weekly, 13 September 2006).

Both sides are aiming to conclude an agreement by March. The Bush
administration has until the end of that month to submit a deal for
Congressional approval without the possibility of major amendments, since its
fast track trade authority expires in July. Both countries have voiced
frustration with the lack of progress in the negotiations, leading some to
question whether an agreement will ever materialise.

Wendy Cutler, the US" chief negotiator, said serious talks on South Korea"s
politically sensitive - and heavily protected -- rice market had yet to take
place. The US is also seeking to lower South Korea"s automobile tariffs.

Seoul, on the other hand, was frustrated by US duties on textiles and
electronics. South Korean officials walked out of one committee on industrial
products, stating that the US" new tariff concession offers "fell
significantly short of our expectations."

North Korea"s nuclear test on 9 October only strengthened Washington"s resolve
to exclude products made in the Kaesong Industrial Complex from the agreement.
Although the industrial park is run by South Korean companies, it is located
on North Korean soil and is a substantial contributor to the Stalinist
country"s economy.

US drug makers have been concerned about the effects of Korean healthcare
regulations on their ability to sell new medicines there. A South Korean
official said that both countries had agreed to speed up the discussions, with
the US aiming to conclude a deal on the mutual recognition of generic drugs
and establish procedures for use of growth hormones and other biological
medicines. The Korea Times reports that the US has asked Seoul to increase
drug prices and extend the time of patent protection.

"S. Korean officials walk out of one committee in free trade talks with US,"
THE HANKYOREH, 23 October 2006; "Korea Demands Recognition for Generic Drugs,"
THE KOREA TIMES, 18 October 2006; "Protests as S.Korea, US resume trade
talks," REUTERS, 23 October 2006.

WASHINGTON TO SEEK EXTENSION OF ANDEAN TRADE PREFERENCES

The Bush Administration will seek Congress" permission to extend unilateral
trade preferences for Bolivia, Colombia, Ecuador, and Peru beyond their
scheduled expiry at the end of this year, a senior US official announced on 24
October.

Speaking in Bogota, Under-Secretary of State Nicholas Burns said that the
administration would seek to extend the Andean Trade Promotion and Drug
Eradication Act for another one to two years, and maintain military aid to
Colombia for at least two more years.

Trade analysts say that continuing the preferences would save thousands of
jobs throughout the region, helping to rebuild worn diplomatic relations while
also limiting the influence of Venezuelan President Hugo Chavez, a staunch US
opponent.

The looming loss of the trade preferences, which Washington offered in
exchange for anti-drug cooperation, had motivated Peru, Colombia, and Ecuador
to pursue free trade agreements with the US, in order to lock in existing
levels of market access. Peru and Colombia have concluded separate bilateral
FTAs with the US. Even so, it is not clear when they will be ratified and
enter into force, leaving a potential gap during which their exports would be
ineligible for favourable tariff treatment.

Ecuador"s FTA talks with Washington have stalled due to political discord
after its state oil company seized an oil field operated by Occidental
Petroleum Corporation in May. Ecuador"s presidential election on 26 November
pits free trade advocate Alvaro Noboa against Chavez ally Rafael Correa.

Bolivia has declared it is not ready for a formal FTA and is seeking extension
of the one-way preferences. However, Bolivian President Evo Morales" anti-US
rhetoric has strained bilateral relations.

The White House would like to have the bill passed between the November
midterm elections and the January entry into office of the new Congress.
During this so-called "lame-duck session," Bush"s Republican Party would be
guaranteed to still hold the majority vote in Congress.

Gary Hufbauer, an economist with the Washington-based Institute for
International Economics, said the White House"s decision recognised that the
loss of trade benefits would unduly punish Colombia and Peru, while also
"[giving] the populists in Bolivia and in Ecuador more reason to push back
against the United States."

ICTSD reporting; "Scrambling to Save Trade Perks," LOS ANGELES TIMES, 21
October 2006; "Bush to seek extension of Andean trade program," REUTERS, 24
October 2006.


SOUTHERN AFRICA TO PUSH FOR GREATER ECONOMIC INTEGRATION

Heads of state and senior ministers from the 14-member Southern African
Development Community (SADC*) agreed at a 23 October summit in Johannesburg to
work towards harmonising trade and investment rules, with the ultimate goal of
establishing a common market and shared currency.

Botswana, Zimbabwe, and Swaziland signed the SADC Finance and Investment
Protocol, bringing the total number of signatories up to 10. Once ratified by
nine member countries, the protocol will seek to encourage investment and
macroeconomic stability by harmonising their financial and investment policies
and promoting cooperation on trade and taxation matters.

The investment protocol is part of a broader plan for economic integration and
convergence in the region. Modelled after the EU, it calls for a free trade
area by 2008, a customs union by 2010, a common market by 2015, and economic
and monetary union by 2018.

SADC Chair and Prime Minister of Lesotho Pakalitha Mosisili said "[it] is
quite clear that we are on course to realizing the free trade area (FTA) by
2008…so all in all its all systems go." Member states are aiming to
eliminate tariffs on 85 percent of all goods traded within the region by then.

The summit leaders recognised that many challenges lay ahead, noting that
commodity-reliant SADC countries would have to diversify their economies and
increase intra-regional trade and growth. They also expressed concern about
endemic poverty in the Southern Africa region outside South Africa and
Botswana, and the slow pace of growth compared to other regions on the
continent.

Nevertheless, Mosisilli stressed to reporters after the meeting that SADC
member states are committed to "developmental integration elements such as
infrastructure, poverty alleviation and sustainable development," and to
"ensuring that we are all winners and that there would be no losers in
integration, that the small economies will be also catered for and will
benefit fully."

*Angola, Botswana, Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique,
Namibia, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.

ICTSD reporting; "SADC Free Trade Soon a Reality, Summit Told," SAPA, 23
October 2006; "SADC Urges Remaining Countries to Sign Investment Protocol,"
BUA NEWS, 24 October 2006; "Single Currency on SADC Agenda," PRETORIA NEWS, 24
October 2006; "Southern African Nations Press Ahead with Economic
Integration," XINHUA, 24 October 2006.


JAPAN, VIETNAM TO LAUNCH BILATERAL FTA TALKS

Japan and Vietnam have agreed to launch bilateral free trade agreement (FTA)
talks in January 2007, Japanese government sources announced on 18 October.
Vietnamese Prime Minister Nguyen Tan Dung visited his Japanese counterpart
Shinzo Abe last week to finalise the plans.

The decision continues Japan"s recent push for bilateral and regional free
trade initiatives, motivated in part by increasing competition with China.
Japan has already signed FTAs with Singapore, Mexico, the Philippines, and
Malaysia. It has also broached the possibility of bilateral FTA talks with
India. In August, soon after the WTO Doha Round negotiations were suspended
indefinitely, Japan proposed the formation of a "Comprehensive Economic
Partnership in East Asia (CEPEA)." This would establish trade and investment
links between the ten-member Association of Southeast Asian Nations (ASEAN)
and the six other members of the East Asia Summit -- China, South Korea,
Japan, India, Australia, and New Zealand.

For Vietnam, the agreement is the most recent step in a long trend of
liberalisation which saw its booming economy grow by 8 percent in 2005.
Following 11 years of accession negotiations, the WTO is expected to ratify
Vietnam"s membership in a matter of weeks.

The bilateral FTA negotiations follow an already-flourishing economic
relationship between the two countries: Vietnam is an attractive target for
Japanese business investment; and the countries" trade exchange - Japan
imports fisheries products, garments, and electronics products from Vietnam,
while exporting machinery, steel, and auto parts to its East Asian neighbor -
is expected to reach USD 10 billion this year.

The two sides announced several steps to expand bilateral cooperation. Japan
indicated that it would increase official development assistance for improving
infrastructure and technology projects in Vietnam.

Japan"s recent FTAs have been comprehensive deals liberalising trade in goods,
services, with far-reaching protections for foreign investors and intellectual
property rights.