WASHINGTON, Dec 3 (Reuters) - South Korea has agreed to give the United States five years to phase out a 2.5 percent tariff on Korean-built cars rather than cut the tariff immediately, clearing the way for a deal on a stalled bilateral trade pact, the Wall Street Journal reported on Friday.

An article on the newspaper's website quoted people familiar with the negotiations as saying the phase-out was intended to encourage union support when the agreement moves to Congress, where a political battle is likely.

The United States and South Korea had been edging closer to a deal to revive prospects for the agreement, which is subject to review by President Barack Obama and South Korean President Lee Myung-bak.

South Korea is the United States' seventh-largest trading partner and eighth-largest export market. Last year, the United States exported $28.6 billion worth of goods to South Korea and imported $39.2 billion of products from that country, for a U.S. deficit of $10.6 billion.

Details of the revised pact, which must still be ratified by both nations' legislatures, are expected to be released later Friday, barring any last-minute snag, the Wall Street Journal reported.

It said negotiators discussed a possible four-year phase-out of the U.S. auto tariff but opted for a longer agreement to better attract union support.

2010-12-03 19:41 (UTC)

Reporting by David Morgan and Doug Palmer;

Editing by James Dalgleish.

Source: reuters.com