SEOUL, May 7 (Yonhap) -- South Korea and the European Union started their first round of negotiations to forge a free trade agreement (FTA) on Monday, with both sides bargaining on how to tear down nontariff barriers such as safety regulations on cars and intellectual property rights.

The ambitious negotiations aim to seal what would be another major economic partnership since South Korea has reached a landmark free trade agreement with the United States early last month.

No deadline is set for a deal with the EU but South Korean officials hope to wrap it up within a year. The second and third rounds of the talks are scheduled for July and September in Brussels. No time frame has been set for the fourth round due to be held in South Korea.

"Working-group meetings are under way...but we didn't start discussions into specifics," the EU's chief negotiator Ignacio Garcia Bercero, director of bilateral trade relations at the European Commission told reporters during the first day of talks. Asked what the mood of the talks was like, he replied, "Very good."
Earlier, his South Korean counterpart Deputy Trade Minister Kim Han-soo said both sides will focus on setting a time frame for negotiations such as when they will exchange offers on tariff elimination and how they will set parameters for an agreement, characterizing the process as a "foot patrol."
During the first day of the five-day round, negotiations were under way in three areas: tariff elimination on merchandise, services and investment and customs administration, according to a South Korean Trade Ministry official.

The EU requested South Korea ease safety regulations on automobiles and intensify efforts to crack down on fake goods, which the negotiators said hurt sales of European luxury brands such as Louis Vuitton and Rolex in South Korea, said the ministry official, who refused to give his name, citing the sensitivity of the talks.

In return, South Korea demanded the EU phase out tariffs on automobiles, flat panel televisions and other industrial goods at an early date and soften its environmental regulations, the official said.

South Korean officials expect that the negotiations with the EU will not be as difficult as the tedious 10-month give-and-take with the U.S., which often sparked violent protests.

Still, South Korean officials anticipate tough negotiations with the EU, with the 27-member economic bloc expected to target South Korea's service sector. South Korea, for its part, will try to seek greater access to the EU's auto market and change anti-dumping policies, they said.

Agriculture is unlikely to pose a big problem, as both sides are expected to drop some sensitive items such as rice and beef from the proposed deal, Kim said. Other contentious issues such as access to the broadcasting and movie markets are also unlikely to be put on the negotiating table, he added.

On Sunday, South Korea's Trade Minister Kim Hyun-chong stressed the importance of free trade for South Korea, which relies on exports for more than 70 percent of its gross domestic product.

EU Trade Commissioner Peter Mandelson, also speaking at a joint news conference with Kim in Seoul, said his side is interested in South Korea's pharmaceutical, chemical and cosmetics markets.

"The kind of FTA that we have in mind is one that is ambitious in coverage, aiming at the highest possible degree of trade liberalization of services and investments," Mandelson said.

South Korea and the EU did US$79.4 billion in two-way trade in 2006, putting the EU on equal footing with the U.S. as the nation's largest trading partner after China. The EU is the biggest foreign investor in South Korea, with $5 billion in 2005 alone.

While a deal is expected to bring benefits to both sides, South Korean analysts believe that farmers will be on the losing end.

"In particular, the EU has a greater competitive edge in the prices of pork, dairy products and fruit. A deal would definitely damage South Korean farmers in those sectors." said Shin Jae-keun, a senior researcher at state-run Korea Rural Economic Institute.

South Korea lost $1.2 billion in agricultural trade with the EU in 2005, the latest figure available.

As the two sides began negotiations at a Seoul hotel, about 20 South Korean activists held a peaceful demonstration in front of the hotel's main gate to protest against the proposed free trade deal, accusing their government of trying to reach a harmful trade pact with another giant economy.

Heo Young-koo, deputy chief of the Korean Confederation of Trade Unions, an umbrella labor group, said that knocking down trade barriers will allow huge foreign companies to dominate the market and drive small farms out of business.

"The government's free trade policies are hurting the livelihood of farmers and laborers. We are here to block this," Heo said, pumping his fist in the air.

Scores of police officials were deployed to guard the venue of the talks. Earlier in the day, a brief scuffle erupted as police tried to prevent protesters from holding a demonstration. No injuries were seen.