The US and South Korea have a chance to finish a free-trade agreement by end-March, making it possible for President George W. Bush to submit the deal to Congress before his negotiating authority runs out, US Trade Representative Susan Schwab said.

“If we could make significant progress this week, that could get us within touching distance of an agreement,” Schwab told reporters following a speech at an event hosted by a coalition of business groups pushing Congress to renew Bush’s Trade Promotion Authority.

Time is running out for US and South Korean trade negotiators to work through some of the toughest trade barriers. The trade promotion authority expires at the end of June, and trade laws require that the White House notify Congress 90 days in advance of signing an agreement.

Around 200 negotiators from both sides are working in groups to bring down barriers to trade in autos, pharmaceuticals, agriculture and other areas. On Sunday, Assistant USTR Wendy Cutler, the lead negotiator on the US side, said a deal won’t be completed this week.

Schwab said she is “encouraged” by her conversations on trade issues with Democratic leaders in the House and Senate. She said she has had discussions with House Ways and Means Chairman Charles Rangel, D-NY, and Senate Finance Chairman Max Baucus, D-MT, on renewal of the trade promotion authority and congressional approval of free-trade agreements with Peru, Colombia and Panama. Final approval of these agreements has been held up, with Democratic leaders arguing labor provisions in the pacts aren’t sufficient.

“I know they understand the importance of keeping the US engaged in the global marketplace,” Schwab said. Failure to renew trade negotiating authority would signal to US trading partners that it has given up on the Doha round of trade liberalization talks, she added.

Schwab will testify this week before both the House Ways and Means and the Senate Finance committees. (Dow Jones)