April 18 (Bloomberg) -- South Korea agreed to ease curbs on U.S. beef imports imposed because of the risk of mad-cow disease, clearing an obstacle to ratification of a $29 billion free-trade accord between the two countries.

The North Asian nation will first allow bone-in cuts from animals younger than 30 months, and later raise the age limit if the U.S. tightens controls on feed, the Ministry for Food, Agriculture, Forestry and Fisheries said in an e-mailed statement today. Imports will probably resume after mid-May, it said.

Restrictions on U.S. beef have been one impediment to the trade agreement, which President Lee Myung Bak needs to meet a pledge to boost economic growth to 7 percent and double per- capita income to $40,000 a year by 2017. Cattle in Chicago rose to a six-week high on the outlook for greater demand from South Korea, once the third-biggest buyer of U.S. beef.

``President Lee has earned a better chance of urging the U.S. Congress to approve the deal,'' Cheong In Kyo, an economics professor at Inha University in Incheon, said by phone today.

The FTA, the biggest for the U.S. since the 1994 North American Free Trade Agreement, was signed last June. Lee is scheduled to hold talks in the U.S. later today with President George W. Bush, who said he wouldn't submit the deal to Congress until South Korea removed restrictions on U.S. beef.

Import Ban

Still, given animosity between Democratic lawmakers and Bush, election-year politics and an impasse over a similar agreement with Colombia, the Korean accord faces a steep climb this year, analysts say.

``A lot of the oxygen has been sucked out of the process by Colombia,'' said James Bacchus, a pro-trade lawyer at Greenberg Traurig and former Democratic congressman. ``This is all a long shot given the limited amount of time available this year.''

Representative Sander Levin, the chairman of the House Trade Subcommittee, said South Korea's decision to let in U.S. beef won't be enough to get the free-trade accord approved by Congress.

``A last-minute, unenforceable, untested, agreement on beef is not enough to satisfy Congress,'' Levin said in a statement. ``The problem with this FTA has always been broader than beef.''

Clinton, Obama

Both Democratic candidates for president, Senators Hillary Clinton and Barack Obama, reiterated today that they oppose the accord and vowed to renegotiate it if elected president.

Korea is ``a deal that will cost America jobs,'' Clinton said in a response to questions from the Pennsylvania Fair Trade Coalition, which was made public today.

The U.S. is South Korea's second-largest export market behind China, with shipments totaling $45.8 billion in 2007. Imports from the U.S. last year reached $37.2 billion. The trade agreement would eliminate or reduce tariffs on a wide range of goods including automobiles, vegetables and electronics.

South Korea imported $815 million of U.S. beef in 2003, the most behind Japan and Mexico, before all imports were banned late that year when the U.S. found its first case of mad-cow disease. The restriction was partially lifted in 2006 for boneless cuts from young cows, with shipments stopped in October after bone fragments were found in meat.

U.S. Export Losses

Loss of South Korean sales has cost the U.S. beef industry as much as $4 billion since 2003, said Erin Daley, research and analysis manager with the U.S. Meat Export Federation, a trade group representing Tyson Foods Inc., Sara Lee Corp. and others. The country purchased only $612,000 of U.S. beef in 2006, according to the federation. With full reopening, South Korea sales may reach pre-mad cow levels within 18 months, she said.

``There's tremendous demand for short ribs in South Korea,'' which alone will add as much as $18 to the value of a head of cattle once sales resume, she said. ``Korea demand is strong enough that demand could recover really quickly.''

An agreement on the beef issue ``helps a lot,'' Senator Max Baucus of Montana, who supports the Korea-U.S. accord, said on April 17 in Washington. Baucus said that once the Korean market is fully opened to U.S. beef he would be ready to begin discussions on bringing the free-trade deal to a vote.

The U.S., the world's third-largest beef exporter behind Brazil and Australia, is trying to regain its export markets.

In February, Meat & Livestock Australia said the expected relaxing of restrictions on U.S. beef imports by South Korea and Japan this year, would cause a ``significant readjustment'' of Australia's beef sales from North Asia to other markets in Asia, the U.S. and the domestic market.

Japan Restrictions

Japan, Asia's biggest beef importer, allows beef imports from the U.S. on condition that meat is from cattle aged up to 20 months and that specified risk materials, such as spinal cord, are removed from products.

Talks between Japan and the U.S. over Japanese restrictions have not made progress since experts from the two governments met in Tokyo in August last year, said Takashi Himeda, director at the animal health division of Japan's Ministry of Agriculture, Forestry and Fisheries.

Himeda didn't expect South Korea's decision to revise import conditions to have a direct impact on Japan-U.S. talks.

Continued mad cow-related restrictions on U.S. beef trade with Japan and South Korea have hurt exports, Chief Executive Officer Richard Bond of Tyson, the world's largest meatpacker, said on Nov. 12. The two Asian nations were Tyson's biggest overseas customers before December 2003.

Cattle futures for June delivery were unchanged at 92.65 cents a pound at 11:44 a.m. local time on the Chicago Board of Trade, after earlier rising to 93.45 cents, the highest since March 3.

``Safe, affordable, high-quality American beef will soon be back on Korean tables,'' U.S. Trade Representative Susan Schwab said.

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To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net.

Last Updated: April 18, 2008 13:02 EDT