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Little change from revised South Korea car deal: U.S. ITC

WASHINGTON (Reuters) - U.S. auto and auto parts exports to South Korea should increase about 54 percent under a proposed free trade deal that was revised to address auto industry concerns, a new government study said on Thursday.

That was "similar" to the 46 percent to 59 percent jump that was expected under the original agreement, the U.S. International Trade Commission said in a report.

The commission, which is tasked with providing estimates of the impact economic of free trade agreements before they go to Congress for a vote, said it expected U.S. auto exports to South Korea to rise by $194 million under the revised deal.

In dollar terms, that is less than it forecast in 2007 for the original pact, "reflecting the economic downturn and reduced trade flows of 2009," the ITC said.

The new study came the same day a top U.S. trade official told lawmakers the White House was ready to start work with key congressional committees to win approval of the pact.

The United States and South Korea signed the free trade agreement in June 2007.

The deal ran into stiff opposition from auto-state lawmakers, such as Representative Sander Levin, a Michigan Democrat, who said it failed to tear down South Korean non-tariff barriers that have long kept out American cars.

President Barack Obama's administration in December persuaded South Korea to make a number of changes to the original agreement.

Those included raising an exemption from South Korean safety standards for U.S. automakers to 25,000 cars each, from 6,500 cars previously, as long as U.S. standards were met.

Korea also agreed to change certain environmental requirements to allow in more American cars.

The ITC estimated that removal of such non-tariff barriers would boost U.S. auto exports by about $48 million to $66 million. But that likely "would be tempered" by a longer phase-in for tariff cuts under the revised deal, it said.

The panel estimated that South Korean auto and auto parts exports to the United States would increase 11 percent under the revised deal, compared to 9 percent to 12 percent under the original pact.

However, a longer tariff phase-out and expanded South Korea auto production capacity in the United States suggests there could be less of a short-term increase than under the original pact, the panel said.

In dollar terms, South Korean exports to the United States are expected to rise by $907 million as result of the revised pact. That is less than expected under the original deal, "again reflecting the economic downturn and reduced trade flows of 2009," the panel said.

(Reporting by Doug Palmer; editing by Paul Simao)