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Korea's 'platform law,' slammed by White House as 'nontariff barrier,' faces scrutiny from U.S. House

Published: 03 Jul. 2025, 19:00 Updated: 03 Jul. 2025, 19:19

U.S. President Donald Trump speaks during a roundtable at ″Alligator Alcatraz,″ a new migrant detention facility at Dade-Collier Training and Transition facility in Ochopee, Florida on July 1. [AP/YONHAP]

As the July 9 expiration date for the U.S.-designated mutual tariff deferral approaches, Korea’s online platform law — long criticized by the Donald Trump administration as an iconic example of “nontariff barrier” — has emerged as a key point of contention in Korea-U.S. trade negotiations.

Following pressure from the White House, members of the U.S. House of Representatives have also raised concerns, calling the law an excessive regulation targeting U.S. tech companies.

“As you know, Korea is a critically important geopolitical ally, a key player in our Indo-Pacific economic strategy, and among our most significant trading partners, in part thanks to the U.S.-Korea FTA,” wrote 43 House lawmakers — including Adrian Smith, Republican of Nebraska who chairs the Ways and Means Subcommittee on Trade, and Representative Carol Miller, Republican of West Virginia — in a letter dated Tuesday.

The letter was addressed to Treasury Secretary Scott Besent, Commerce Secretary Howard Lutnick, and U.S. Trade Representative (USTR) Jamison Greer. Representative Young Kim, a Republican of California and a Korean American, was among the 43 signatories from her party.

The letter urged the Trump administration to “address remaining barriers Korea imposes on U.S. companies. Doing so could further level the playing field for American exporters, strengthen supply chains, and support continued bilateral investments, to the benefit of American industry, consumers and workers.”

Yeo Han-koo, right, Korea's new trade minister, talks with U.S. Trade Representative Jamieson Greer, left, and U.S. Commerce Secretary Howard Lutnick during their meeting in Washington on June 23, in this photo released by Korea's Ministry of Trade, Industry and Energy. [YONHAP]

Designed to disadvantage U.S. digital firms?

The U.S. lawmakers' concerns stem from Seoul's so-called platform law targeting companies with over 3 trillion won ($2.2 billion) in revenue for alleged unfair business practices in the industry.

Although it is being referred to as the online platform law, it is a proposed bill to amend the Act on Fair Transactions in Large Retail Business introduced to the National Assembly that aims to penalize malpractice, including favorable treatment of a company's own platforms, cross-selling services as a bundle and multihoming.

“One barrier that we urge you to address in any negotiations is proposed legislation advanced by the Korea Fair Trade Commission (KFTC) and embraced by the new Lee Jae Myung government, which disproportionately targets U.S. digital companies for heightened regulatory requirements,” said the letter.

“The legislation mirrors the European Union’s blatantly discriminatory Digital Markets Act and would impose disparate legal and enforcement standards designed to undermine innovative business models and disadvantage successful American companies.”

The letter also criticized the bill, saying it “would also advance the interests of the Chinese Communist Party (CCP) by disproportionately targeting American companies while exempting major Chinese digital giants like ByteDance, Alibaba and Temu.”

“Additionally, Korea has long used competition law to advance protectionist aims and promote discriminatory policy outcomes,” said the letter. “In recent years, the KFTC has been the primary mechanism to accomplish these ends. In some cases, this has led to targeting U.S. companies with dawn office raids, Page 2 hyperaggressive enforcement measures, and threats of criminal prosecution for common industry practices that are not considered criminal in any other country.

Trade Minister Yeo Han-koo speaks during a meeting with reporters at the Korean Embassy in Washington on June 27. (Yonhap)

“Such excessive and arbitrary competition law enforcement not only leads to unjustified investigations and unwarranted penalties but also greatly constrains U.S. business operations in the Korean market.”

U.S. report criticizes 'digital trade barrier'

In its annual National Trade Estimate report released in late March, the USTR also criticized Korea’s platform bill, which applies regulatory standards based on revenue, arguing that it unfairly targets many U.S. tech companies.

The report also labeled Korea’s online platform regulation trends, restrictions on the use of foreign cloud service providers and proposed network usage fees for foreign content providers “digital trade barriers.”

Last month, the Wall Street Journal reported that digital trade issues, including the platform law, were central topics at a high-level Korea-U.S. trade negotiation in Washington. According to the Journal, the U.S. delegation raised the issue during talks with Yeo Han-koo, Korea’s Trade Minister.

Korean Trade Minister Yeo Han-koo, right, poses for a photo with Jason Smith, chairman of the House of Representatives' Ways and Means Committee, during their meeting in Washington on June 25, [YONHAP]

Core agenda item?

The Journal reported Wednesday that Korea’s “proposed regulations on U.S. e-commerce firms doing business in South Korea have drawn the ire of Greer and American firms such as Google and Coupang, further complicating negotiations,” adding “a deal isn’t imminent,” citing anonymous sources with knowledge of the talks.

Yeo met with numerous U.S. officials, including Lutnick, Greer and Doug Burgum, chairman of the National Energy Counsel and Secretary of the Interior, during his visit to the United States from June 22 to 27. The Journal also reported that Korea “wants relief from tariffs on autos, steel and aluminum.”

As the U.S. administration and ruling party lawmakers intensify pressure during bilateral trade negotiations, Korea’s government is facing mounting concerns over relaxing its platform law regulations. Recently, Canada also attempted to introduce a digital tax targeting tech companies at home and abroad, but withdrew the plan after Trump strongly objected and suspended trade talks.

Meanwhile, after the U.S. announced a trade deal with Vietnam on Wednesday that includes a 20 percent tariff, Deputy Treasury Secretary Michael Faulkender said in a broadcast interview with CNBC that Washington “anticipates(s) making announcements prior to the July 9 time period.”

“I would expect that we would have a number of deals that are announced next week,” he said. “There will be some level of tariffs that are imposed if countries have not come back to us with trade deals that facilitate us moving along with the negotiations."

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY KIM HYOUNG-GU [[email protected]]