Seoul, March 26:

The United States and South Korea on Monday began a make-or-break final round of free trade talks as local officials said they had narrowed differences on the key issue of farm trade.

Agriculture is a major obstacle at the tough talks, which began almost 10 months ago and must end on Friday. The stakes are high for both sides.

Total two-way trade was worth 74 billion dollars last year and an agreement could boost this figure by about 20 percent, according to some studies. South Korea is pushing for a pact, despite strong protests from farmers and others, in an attempt to make its economy more competitive to meet a growing export challenge from China.

For the United States, a deal would be its biggest since the 1993 North American Free Trade Agreement. “While progress is still minimal, both sides have managed to narrow differences in agriculture,” Bae Jong-Ha, South Korea’s lead negotiator for agriculture, was quoted by Yonhap news agency as saying.

Bae said rice — the most sensitive farm issue — has not yet been taken up as a formal agenda item, although US officials said last week they will raise it. Seoul officials say they are already committed to opening the rice market wider under a deal with the World Trade Organisation and its inclusion in these talks could be a deal-breaker.

South Korea, one of the largest markets for US farm products, is seeking to phase out tariffs over 10 years on other sensitive food products while the US wants immediate action.

“The free trade agreement (FTA) is certain to ruin our agriculture industry,” said farmer Chang Dong-Hwa. He was one of about 50 protesters outside a hotel ringed by hundreds of riot police where the delegations led by Trade Minister Kim Hyun-Jong and Deputy US Trade Representative Karan Bhatia were meeting.

“Farmers will be the biggest victim, with their debts expected to rise further. We will step up our fight to protect our livelihood,” Chang said.

Farmers, other workers and anti-globalisation activists say an FTA opening the way for cheaper imports would threaten their jobs and depress wages. Some 7,500 activists staged a protest Sunday outside the US embassy.

“The deal, if agreed, will accelerate the dominance of foreign investors in our country,” union leader Chung Yong-Kun told reporters Monday. The head of the small leftist Democratic Labor Party has been on a protest hunger strike for nearly three weeks, according to party officials.

The US government must submit any deal to Congress by April 2 for a mandatory 90-day review before President George W. Bush’s “fast track” trade promotion authority expires on July 1.

Other contentious items included Seoul’s bans on shipments of US beef. The issue, while not part of an FTA accord, could derail it. US officials say legislators will not approve any overall pact without a beef deal.