Brazil Yields on Kia Factory

President Kim Dae-jung and President Fernando Henrique Cardoso of
Brazil agreed Thursday to put back the completion date of the Kia Motors factory in Brazil from 2001 to 2003, implying that work will resume.

Meeting with Mr. Kim at the Blue House, Mr. Cardoso said that the Brazilian government will defer some $210 million in penalties incurred by Kia Motors for failing to meet the target.

In 1996, the Kia Motors Co. launched a business plan to open a car-production line in the northeastern Brazil, but its bankruptcy in 1997 and merger with Hyundai Motors in October 1998 stalled the project. The Brazilian government had given Kia Motors some $72 million in preferential treatment, including tariff exemptions.

The Brazilian president expressed difficulty about extending pref-erential treatment to Kia Motors should it proceed with the factory construction. The two governments agreed to open talks to address this issue.

Mr. Cardoso also promised that Brazil would start talks with North
Korea to normalize relations, a move supporting Mr. Kim's rap-prochement policy with the North.

Diplomatic officials stressed the importance for Seoul to improve relations with Brasilia because of the increasing trend toward free trade and the formation of trade blocs.

"The South American countries and the European Union are moving to sign a free trade agreement," a diplomatic official said. "And considering the movement to step up free trade by forming a Free Trade Area of the Americas, we need to strengthen bilateral rela-tions with Brazil."

Mr. Cardoso, the first Brazilian president to visit Korea, will leave Saturday.

by Kim Ji-soo