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South Korea and the European Union concluded a week of free trade talks on Friday, with Seoul's chief negotiator saying both sides need to work more to bridge gaps in key areas such as automobiles and agriculture.

However, Kim Han-soo, the chief of South Korea's negotiating team, cited progress in less contentious issues _ anti-dumping rules, financial services and dispute settlement, which are already governed by the multilateral World Trade Organization system.

"Overall, negotiations took place at a normal pace, but there are still many different issues in tariff reductions of industrial goods," Kim told reporters after the end of the five days of negotiations, the second round since May.

South Korea's level of opening its market to European cars will be a "touchstone" to build momentum for the talks, Kim said.

Despite the lack of progress in sticky issues, Kim said both sides agreed to work more to resolve differences in upcoming rounds.

Compared with the pace of similar negotiations South Korea concluded with the United States in early April, Kim said progress at this week's talks with the 27-nation economic bloc is "better than expected.

"Overall, talks are going well because there are less sensitive issues than the South Korea-U.S. FTA negotiations," Kim said.

"The mood for this week's talks is constructive and friendly," he added. "We expect to strike a comprehensive and high-quality FTA with the EU." Talks are scheduled to resume in September in Brussels. A fourth round of negotiations is set for October in Seoul, Kim said.

South Korea's highly profitable automobile trade has emerged as a major sticking point this week. The EU is asking South Korea to phase out its 8 percent tariff on auto imports within three years, instead of the seven years Seoul wants.

Last year, South Korea sold 740,000 cars worth US$9.1 billion in Europe, while buying only 15,000 vehicles worth $1.6 billion from Europe, according to official South Korean figures. The EU's average tariff on car imports is 10 percent.

Kim tried to allay the EU's concern, saying that his government would consider accelerating the pace of its tariff elimination on cars from the 27-nation economic bloc.

Some South Korean delegation members, who support the position of the commerce ministry, openly rebutted kim's remarks this week, arguing that their country's current import tariff system is not unfair to vehicle imports from the EU.

"I was ashamed," Kim told reporters on Thursday. "We can disagree on things at some point, but it should not happen during negotiations."

Another sticking point concerns South Korea's request that the propposed FTA covers goods made at a South Korean-built industrial zone in the North Korean town of Kaesong.

Kim said the EU's initial response on the Kaesong issue was "positive." If successful, the FTA would be the biggest such commercial partnership for South Korea, Asia's third-largest economy, surpassing an agreement signed early this month with the U.S.

No deadline was set for the South Korean-EU free trade talks, but South Korean officials say they hope to reach a deal by the end of this year.

The EU is the second-largest trading partner of South Korea, with $79 billion in bilateral trade in 2006. Unofficial studies suggest an FTA would boost the figure by as much as 40 percent. The tentative free trade deal between South Korea and the U.S. must be ratified by the South Korean National Assembly and the U.S. Congress.
BRUSSELS, July 20 (Yonhap News)