June 30 (Bloomberg) -- South Korea and the U.S. signed a free-trade agreement today that aims to open the Korean economy to more foreign investment and forge new links for American companies with the fast-growing Asian region.

The agreement, which faces opposition from Democratic leaders in the U.S. Congress, was signed by U.S. Trade Representative Susan Schwab and Korean Trade Minister Kim Hyun Chong in Washington today. It's estimated to add $29 billion to the countries' $78 billion-a-year commercial relationship.

``America's economic future depends heavily on more free trade agreements like the one we are signing today with Korea,'' Schwab said at a ceremony in Washington. The Bush administration's trade negotiating authority expires today, and the agreement had to be signed today for it to qualify for rules that force lawmakers to vote for the deal without amendment.

U.S. banks, insurance companies, movie studios and pork producers say that the agreement with South Korea is the most economically beneficial trade deal signed by the U.S. since the North American Free Trade Agreement in 1994.

The signing opens the possibility that Congress may approve it this year, said Myron Brilliant, vice president for Asia of the U.S. Chamber of Commerce. ``I hope Congress would understand the stakes,'' Brilliant said before the signing.

Opposition

Opposition to the agreement in the U.S. is being led by the United Auto Workers union and Ford Motor Co., who say it doesn't do enough to eliminate barriers to sales of U.S.-made automobiles in South Korea while it removes U.S. tariffs on Korean-made vehicles.

Democrats in Congress have taken up their cause, saying they don't support the accord ``as currently negotiated.''

The Korean agreement ``is a missed opportunity,'' House Speaker Nancy Pelosi and other Democratic leaders said in a joint statement yesterday. ``The agreement does not address in an effective manner the persistent problem of non-tariff barriers, particularly those blocking access of U.S. manufactured products.''

Senate Finance Committee Chairman Max Baucus has also said he won't move the accord through his panel until South Korea agrees to fully open its market to U.S. beef.

Schwab ruled out making any future amendments to the agreement in order to garner more votes from lawmakers: ``This agreement will stand,'' she said at the ceremony on Capitol Hill.

Congressional Approval

While the agreement was signed today, it won't take effect until the legislatures in both countries approve it. The U.S. Congress may take up the agreement later this year or in 2008, Brilliant said.

``Our task now is to ensure that the Korean and United States Congresses approve this agreement,'' Schwab said today.

Bush, in a statement, said the deal will ``promote economic growth and the creation of better paying jobs in the United States, and help American consumers save money while offering them greater choices.''

The agreement is estimated by the U.S. International Trade Commission to have more far-reaching effects on the Korean economy because it will be eliminating higher tariffs, especially for many farm goods, and opening up its insurance, banking and other services markets to American companies.

``We will grasp new opportunities together, and we will not be afraid of change,'' trade minister Kim said. ``Hiding behind barriers will only lead to stagnation.''

South Korean auto workers went on strike for a second day yesterday to protest the agreement, and about 15,000 riot police were stationed in downtown Seoul ahead of planned rallies later today.

Farmers, Unions

While the agreement is supported by a majority of the South Korean population, according to opinion polls, it has drawn violent opposition from farmers, labor unions and even some movie stars, who oppose a provision allowing more U.S.-made films into the country.

In the U.S., even the staunchest supporters of trade say they have reservations.

``The negotiations were difficult for both sides, and this free-trade agreement is not perfect,'' especially for U.S. automakers, John Engler, the president of the National Association of Manufacturers, said in a statement. ``Overall, this agreement will help U.S. manufacturing as we wrestle with how to deal with our trade position in Asia.''

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

Last Updated: June 30, 2007 13:08 EDT