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South Korea said on Friday it will destroy or return a second shipment of U.S. beef after bone fragments were found in violation of a bilateral agreement that allowed imports of U.S. beef to resume.

The second rejection in one month is expected to be an issue for South Korean and U.S. trade negotiators who are scheduled to hold a fifth round of free trade agreement (FTA) talks next week at the Big Sky Resort in Montana, a state where beef cattle are raised.

South Korea, once the world's third-largest buyer of U.S. beef, has agreed to import only boneless meat from the United States, ending a three-year ban after an outbreak of mad cow disease in that country.

Last month, South Korea found a bone fragment in the first shipment from U.S. slaughterhouse Creekstone Farms Premium Beef in Arkansas City, Kansas. The first nine-ton shipment of U.S. meat will also be destroyed or returned.

South Korean consumers here are particularly concerned about mad cow disease, or bovine spongiform encephalopathy. Scientists say mad cow disease is spread when farmers feed cattle with recycled meat and bones from infected animals. It is thought to cause the fatal human variant Creutzfeldt-Jakob disease.

Kang Mun-il, a director general at the National Veterinary Research and Quarantine Service, affiliated with the Ministry of Agriculture and Forestry, said, "Three bone pieces were found in the second shipment of U.S. beef." "No official statement was made by the U.S. so far," Kang told reporters. "If the U.S. side suggests technical opinions, we may review it." The U.S. slaughterhouses asked the South Korean government to separately inspect boxes that they say contain boneless meat, but the ministry has no plan to do so, Kang said.

A third shipment of U.S. beef was scheduled to arrive in South Korea earlier in the day, and attention now focuses on whether or not the shipment will pass government inspection, officials say.

"Beef is a key issue for prominent supporters of the FTA (in the U.S.) such as Senator Max Baucus," said Troy Stangarone, director of congressional affairs and trade analysis at the Washington-based Korea Economic Institute.

"If beef imports were to be cut back, rather than expanded, it could impact the support for the FTA in Congress," Stangarone said in an e-mail interview.

After the first U.S. beef shipment was rejected, U.S. Agriculture Secretary Mike Johanns accused the South Korean government of "inventing a reason to reject the meat." "The market isn't even close to opening," Johanns was quoted as saying by Reuters.

Stephen Norton, a spokesman for the U.S. Trade Representative, declined to comment on the beef issue ahead of the fifth round of FTA negiotiations.

On Thursday, South Korea's Deputy Finance Minister Jin Dong-soo said the beef issue is separate from the FTA talks.

"The beef issue can be handled through technical discussions to determine appropriate inspection procedures outside the FTA talks," said Scott Snyder, an expert with the U.S.-based Asia Foundation.

"It will be necessary for the governments to work out an effective inspection regime that is safe for customers, fair to producers and transparent to all sides." Snyder told Yonhap News Agency.

Aside from the beef issue, South Korea and the U.S. are facing a tough showdown in the Montana round with sensitive trade items such as other farm goods, automobiles and medicine on the negotiating table.

Both sides want to wrap up the talks by the end of March next year before the U.S. President George W. Bush loses his fast-track trade promotion authority, which requires a simple yes-or-no vote by Congress with no amendments.

Norton said the U.S. trade representative is hopeful of completing the talks.

"We continue to work with that goal in mind. We remain hopeful," Norton said.

On Wednesday, South Korea's Trade Minister Kim Hyun-jong told lawmakers that the fifth round may not be easy because of the rejection of the first shipment of U.S. beef.

Asked if any settlements will be made in sensitive areas, Kim said it will be very difficult because there were too many sensitive items.

Two-way trade between South Korea and the U.S. totaled more than US$72 billion last year.
Seoul, Dec. 1 (Yonhap News)