The trade war widens

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The trade war widens

U.S. President Donald Trump has ordered the U.S. Trade Representative (USTR) to stop allowing richer countries like Korea from enjoying trade benefits under the World Trade Organization (WTO) after they classified themselves or part of their economies as developing economies. Trump’s move is aimed at the WTO’s rules permitting developing economies to set up tariff barriers against some items. He warned that the WTO will fall apart if “the world’s richest countries” continue to insist on such privileges by feigning to be “developing countries.”

Foreign media, including Reuters and the Financial Times, said Trump’s actions target China. In fact, Trump’s memorandum to the USTR largely targets China. But South Korea, Mexico and Turkey are also on the list of countries that have been receiving “inappropriate treatment.”

Korea is alarmed by Trump’s decision and wonders if it translates into a demand for a full-fledged opening of our agricultural market. If Korea loses its status as a “developing country” in the WTO, it cannot impose 513 percent tariffs on rice imports or offer subsidies to farmers. Some analysts even warn of the possibility of Californian rice being imported here at much cheaper prices, destroying our entire agricultural industry.

The Moon Jae-in administration’s reaction is hardly reassuring. In a press release, the Ministry of Agriculture simply said Washington would not force Korea to give up its special benefits. We are dumbfounded at such wishful thinking.

On top of that, Japan is ratcheting up economic retaliations for our Supreme Court’s rulings on wartime forced labor, as seen in Japanese media reports that Tokyo will approve a revision of the law to deprive Korea of its preferential treatment for trade in a cabinet meeting on Friday. If the revision is passed, a whopping 1,000 export items — including materials for electric batteries and carbon fibers needed for the Moon administration’s goal to achieve a so-called hydrogen economy — will be subject to regulations. That’s a second tsunami of export restrictions following earlier ones on materials for semiconductors and displays, which could shake the very foundations of our industrial base.

The government is pushing for a meeting between foreign ministers of Korea and Japan on the sidelines of the Asean Regional Forum in Bangkok later this week. It must find a breakthrough to diplomatically resolve the problem. At the same time, the government must stop trading in groundless optimism if it really wants to reassure the public credibly.

JoongAng Ilbo, July 29, Page 30
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