Trade negotiations between the US and South Korea have broken up amid a rift over the pricing of medicines.A week of talks in Seoul about a free trade deal ended in confusion as US officials objected to a plan they said discriminated against foreign drugs.

The two sides admitted disagreements in certain areas but said progress was made ahead of more talks in September.

The talks provoked widespread protests by Korean farmers and unions worried about US imports flooding the market.

‘Complex discussions’

If concluded as hoped next year, a deal would represent the US’ largest free trade pact since it signed the North American Free Trade Agreement (NAFTA) with Mexico and Canada in 1993.

Differences remain over the removal of trade barriers in key sectors of the Korean economy particularly cars, agriculture and drugs.

US negotiators are unhappy with a new policy that will see consumers being reimbursed for buying drugs from an officially sanctioned list.

Korean ministers argue the initiative will reduce the cost of vital drugs but US officials believe its imports could lose out as a result.

“We do not believe this proposed change in the Korean system will achieve the objective that Korea has stated for itself,” said Wendy Cutler, Washington’s chief Korean trade negotiator.

Speaking more generally, Ms Cutler acknowledged the trade talks were “complex” but said differences on some issues had narrowed.

Public concern

Korean negotiators are conscious of public concern about the impact of a far-reaching trade deal, with unions claiming an influx of US food and other products could put thousands of farmers out of business.

“We are trying to do good for our people by cutting medicine prices, but the US overturned the negotiating table,” Health Minister Rhyu Si-Min said of the medical policy.

Anti-agreement protests were held in the Korean capital on Friday, although not on the scale of those seen earlier in the week when police clashed with 30,000 people.

The protests were led by unions and farmers concerned about government concessions on staple products such as rice.

Negotiators have seemingly made little headway since the two governments announced plans for a free trade deal in February.

Supporters of a deal argue it will boost the two countries’ already well-established commercial links by abolishing tariffs.

Trade between the two allies was worth $72bn last year.