Protectionism hurts us all

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Protectionism hurts us all

When Apple first filed a patent suit against Samsung Electronics in April last year, the latter’s chairman Lee Kun-hee called it inescapable. “It’s an instinct to want to hit on the head a nail that sticks out.” Korean companies are bombarded with patent suits and retaliatory trade actions as governments and economies around the world turn resentful over foreign manufacturers and imports and find them easy scapegoats for their own slowdowns and high joblessness ahead of key elections.

The ghost of trade protectionism has resurfaced, aiming at Korean companies and products as they increasingly raise their shares in the market. Samsung Electronics, the world’s largest memory chip and mobile phone maker, has become the main target. A U.S. jury sided with Apple and ruled that Samsung compensate the company with more than $1 billion for infringing on its smartphone design and patent rights. In November last year, a U.S. court ordered Kolon Industries pay DuPont Company some $1 billion in damages for stealing trade secrets related to high-strength fibers used in body armour, tires and fiber-optic cables. The compensation is more than 300 times the amount Kolon exported to the U.S. over the last five years.

Korean companies were involved in 117 patent lawsuits in U.S. courts last year, up more than 80 percent from two years ago.

While technology-related products are dogged by patent lawsuits, other Korean industrial goods are bombarded with traditional antidumping complaints. The Office of U.S. Trade Representative accepted Whirlpool’s petition and last month slapped up to 82 percent countervailing duty on Korean bottom-mount refrigerators. Whirlpool has been complaining its market share has fallen to single-digit level from 35 percent and accused Korean producers of selling below the fair price and benefiting from government subsidies. The French government petitioned the European Union to impose restriction on Korean car imports.

Measures to curb Korean industrial products totalled 122 this year, topping last year’s 117. The tally will exceed 130 by the end of the year if the trend keeps up. Even emerging economies like India, China and Brazil are beginning to mount offensives against Korean products. India imposed restrictive actions on 24 Korean products and China 18. The import restrictions mostly target our mainstay export items in electronics, automobiles, steel and chemicals.

This wave of trade protectionism must be strongly addressed. No government is able to resist the temptation of defending its local industries by containing competitive foreign products.

But history tells us of the disastrous ramifications of protectionist trade actions from the 1930 Tariff Act of the U.S., which raised tariffs to record levels against trading partners. The result was a deepening of the Great Depression. All countries must exercise restraint within the global trade framework. We must argue the dangers of protectionist trade in various international venues. No country wins a protectionist trade war. Meanwhile, we should endure by continuing with innovation and efforts to hone our productivity and efficiency.

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