South Korea and the European Union failed to narrow their gap in their free trade agreement (FTA) talks, South Korean Trade Ministry said yesterday.

During a three-day negotiation ending on Friday in Seoul, South Korea called for the EU to drop tariffs on South Korean cars within three years after the bilateral FTA takes effect, while the EU side rejected the demand, local media reported.

The EU imposes a 10 percent tariff on South Korean cars.

However, chief negotiators from South Korea and the EU have agreed to seek a package solution on controversial issues such as auto trade and hold a working-level meetings on the sticky issues in mid-September, with high-level talks to be held in October, South Korean official said.

South Korean Deputy Trade Minister Lee Hye-min and his European counterpart, Ignacio Garcia Bercero, participated in the three-day talks held here.

The EU is South Korea's second largest trade partner after China. In 2007, the bilateral trade volume between South Korea and the EU amounted to US$89.8 billion.

South Korea and the EU have held seven rounds of FTA negotiations since April last year.