Tough times on tradeThe trade environment is worsening for Korea. For at least a decade, Korea has been warned it may hit a bottleneck on the trade front if its economy trails the United States and Japan in technology and China starts to outpace it in terms of production capacity and low cost. A prolonged global slowdown has added protectionism to the equation. Washington has recently turned suspicious and hostile towards Seoul and Korean companies. U.S. Ambassador Mark Lippert says Korea is not properly complying with its commitments in the bilateral free trade agreement with the U.S. and demanded further liberalization in the legal and medical services markets. U.S. Treasury Secretary Jack Lew arrived in Seoul and will be meeting with his Korean counterpart Yoo Il-ho. He is expected to bring up the fact that Korea was placed on a monitoring list for unfair foreign exchange rate policies and demand more endeavors from Seoul authorities to fix the trade surplus with the U.S.
Korea is also caught in the crossfire of trade conflict between the two largest economies. In talks last month, G-7 members led by the U.S. and Japan asked China to address the global glut in steelmaking. The U.S. slapped anti-dumping duties of between 400 percent and 500 percent on Chinese corrosion-resistant steel. The European Union and Japan are poised to take similarly harsh punitive action. China is preparing to take the matter to the World Trade Organization. Meanwhile, Washington is said to be opposing granting Chang Seung-wha, a Korean member of the WTO Appellate Body, a second term due to his track record of delivering rulings the U.S. doesn’t like. Washington may be sending warnings to Seoul on various platforms.
Korea’s makers of corrosion-resistant steel were also slapped with an average 28.3 percent anti-dumping duties by the U.S. Commerce Department. The Korea International Trade Association has recommended that Korean companies with manufacturing bases in China refrain from upping exports to the U.S. and EU because of rising concerns over protectionist policies. Local semiconductor companies are being pressured by the U.S. to join its WTO suit against China on its subsidy policy.
Things will likely get dirtier under a new leadership in Washington. We must brace up for a harsher trade environment and map out contingency plans. We must beef up our trade diplomacy to protect our interests.
JoongAng Ilbo, June 3, Page 30