BUSINESS SECTION

SEOUL, Aug 5, 2005 - Asia Pulse - Investment and easing of import restrictions on tropical fruits is holding up progress in establishing an economic partnership agreement (EPA) between South Korea and Mexico, a government official said Friday.

"Mexico has asked South Korea to pledge investments in that country as a prerequisite for the cooperation accord," said the official at the Europe and Americas division of the Ministry of Commerce, Industry and Energy

This, the official said, is similar to what Mexican policymakers got when they signed a EPA, basically a broader free trade agreement, with Japan in September 2004.

"The Japanese agreed to build a car plant in the country that can produce 50,000 units and have asked if Seoul could do the same," the expert, who wished to remain unanimous, said.

He added that with Hyundai Motor Co. fully committed to its U.S. Alabama plant, there was little leeway for such an investment.

The director-level official also said that Mexico wanted Seoul to make it easier for imported tropical fruits to reach the domestic market. Such a move could run into serious opposition from local farmers who are already feeling the pressure of cheap fruits from Chile.

The free trade agreement (FTA) between Seoul and Santiago that went into effect in April 2004 has caused many fruit growers to go under, causing discontentment here.

"The matter is not something that requires the close attention of broad cooperation and consensus within South Korea, which may be hard to achieve in any short period of time," said the official.

The official, however, said that the two sides were continuing to exchange views on this matter.

South Korea has wished to use Mexico, which has a population of 100 million and is part of the North American Free Trade Agreement (NAFTA), as a springboard to gain access to the huge NAFTA market.

Seoul has been pushing for an FTA for some time, but due to internal political problems in Mexico, had to lower its "target" to an EPA.

South Korea has an FTA with Chile and signed another with Singapore and the four-nation European Free Trade Association. It is currently in the process of seeking similar deals with Canada and the Association of Southeast Asian Nations.

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