But there seems a long way to go for the conclusion of a bilateral Free Trade Agreement because the two sides differ on key issues, from agriculture and textiles to goods produced in an inter-Korean industrial park in North Korea.

Some analysts here say FTA talks with the United States would be South Korea's toughest trade negotiations, with mounting domestic opposition to free trade and market liberalization.

South Korea has dispatched a 146-strong delegation led by FTA Ambassador Kim Jong-hoon to Washington for the first round of formal negotiations due to end Friday. The U.S. negotiating team consists of 178 officials led by Assistant U.S. Trade Representative Wendy Cutler.

South Korean officials said they would push for an early conclusion to the FTA with the United States, saying the accord will boost growth, create jobs and upgrade bilateral ties with Washington, necessary to secure peace and stability on the Korean peninsula.

Finance Minister Han Duk-soo has taken the lead in the campaign, saying an FTA with the United States would provide huge benefits to the South Korean economy.

"Market opening is not a matter of a choice, but a necessity," Han said in a statement to mark the start of the FTA talks with the United States. "If we have a choice, it only concerns whether we utilize opening for benefits or being swept by the wave of opening," he said.

Han said a free trade deal with the United States is critical for the South Korean economic growth currently facing challenges from external uncertainties such as strong oil prices and the won's rise against the U.S. dollar that has eroded the corporate profitability of exporters.

The South Korean economy, the world's 11th-largest, is heavily dependent on exports. The total volume of its external trade amounts to 70 percent of the country's gross domestic product.

The United States is South Korea's second-largest market, after China. Two-way trade with the United States reached some $73 billion last year. The Korea Institute for International Economic Policy, a government-run think tank, says an FTA with the United States would boost South Korea's GDP by two percentage points, or $14 billion.

The FTA will enhance South Korean exports to the United States 15.1 percent and imports 39.4 percent, as well as creating 100,000 new jobs here, it said. The country also expects more investment from the United States, the largest source of foreign direct investment.

"The FTA with the United States would boost South Korea's competitiveness in the service and manufacturing sector, and eventually the overall industry," said Lee Jun-kyu, an economist at the research institute.

If signed, the deal with the United States would be South Korea's first FTA with a major economy. South Korea has signed FTAs with Chile and Singapore and is currently negotiating with several other countries and economic blocs.

But the prospects are not bright, as Seoul and Washington face a bumpy road ahead. They have to narrow differences on such key issues as agricultural trade and automobiles, among others.

The opening of South Korea's highly protected agricultural market is one of the thorniest issues.

Washington is expected to demand that South Korea remove all tariffs on agricultural products while Seoul wants to protect sensitive items such as rice, chicken, tobacco and apples with high tariffs, or emergency import bans.

Agriculture Minister Park Hong-soo said rice should be excluded from the FTA pact, while Washington is pushing for greater market access.

A group of South Korean farmers and civic activists have already traveled to Washington to stage anti-FTA rallies despite the Seoul's government warning of stern punishment.

The protesters, joined by around 250 American activists, marched through downtown Washington Sunday to oppose the proposed free trade deal. In Seoul, hundreds of protesters gathered near the U.S. embassy to oppose the negotiations.

South Korea vows it will persuade the United States to recognize goods made in North Korea's Kaesong industrial park as South Korean products during the FTA talks, but Washington remains reluctant.

The Kaesong complex, located just north of the heavily fortified border, is considered to be one of the main achievements of the landmark 2000 Korean summit. The zone is a testing ground for mixing South Korean capitalism and technology with the North's cheap labor.

South Korea hopes to use the complex to pave the way for greater inter-Korean economic cooperation, but the United States is concerned that "strategic products," such as precision machinery and high-tech personal computers, will reach the industrial park in the North, which the United States views as supporting terrorism.

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