BUSINESS

Korea to file WTO petition against US safeguard measures

By Yonhap
  • Published : Jan 23, 2018 - 11:38
  • Updated : Jan 23, 2018 - 15:59

South Korea's trade ministry said Tuesday it will file a petition with the World Trade Organization against the US government for imposing heavy anti-dumping duties on Korean washing machine and solar panel makers.

The move comes after US President Donald Trump approved recommendations of the International Trade Commission to impose safeguard tariffs on imported large residential washing machines and imported solar cells and modules.

"The US decision to impose tariffs on South Korean washers and solar panels is excessive and apparently constitutes a violation of WTO provisions," Trade Minister Kim Hyun-chong said in a meeting with industry officials. "The US government took actions in consideration of its domestic political situation, rather than abiding by international regulations."

Under the safeguard measure, a 20 percent tariff will apply on the first 1.2 million imported washers in the first year, and a 50 percent tariff on machines beyond that number. A 30 percent tariff will be imposed on imported solar cells and modules above 2.5 gigawatts in the first year.

While a safeguard action is taken to protect a domestic industry from a sudden jump in imports causing or threatening damage to domestic production, Kim said the ITC failed to demonstrate a clear link between increased imports of Korean products and serious harm to US industry.

(Yonhap)

"If we file the suit with the WTO, we can win the case," said Kim, who worked as senior lawyer at the WTO's Appellate Body Secretariat and Legal Affairs Division from 1999 to 2003. "We will put forth a united front with other nations subject to the safeguard measures to actively counter the protectionist trade practices."

Kim said the government plans to bring the case to the next meeting of the WTO dispute settlement body, which is slated for next month.

Leading South Korean tech giants said the steep tariffs would limit American consumers' choices and negatively affect their factories in the US

Samsung Electronics Co. said the US government's heavy tariffs on washing machines will be "a great loss for American consumers and workers," noting that it has hired more than 600 American workers at a new factory in South Carolina, which began production on Jan. 12.

"This tariff is a tax on every consumer who wants to buy a washing machine. Everyone will pay more, with fewer choices," Samsung said in a statement. "Consumers are choosing Samsung premium washing machines for their innovation and design."

LG Electronics Inc. also expressed regret over Trump's decision, saying the ultimate damage will be on US retail channels and consumers.

The Korean company has been preparing to begin operation of its washing machine plant in Tennessee several months earlier than scheduled to counter rising US pressure.

"The decision to levy safeguard measures on Korean washers is expected to have a negative impact on the local economy and the home appliance industry," LG said in a release. "We will take necessary measures for the local supply chain to minimize the impact on our contractors and consumers in the US"

In contrast, Whirlpool Corp., which filed a safeguard petition, welcomed Trump's decision, saying it would add 200 new full-time positions at its manufacturing plant in Ohio.

"This is a victory for American workers and consumers alike," Whirlpool chairman Jeff Fettig said in a release posted on its website.

Local solar panel makers also expressed worries that their exports to the US market will be hit hard by the tariffs.

South Korean companies exported US$1.3 billion in solar cells to the US last year, ranking third in the world after Malaysia and China, according to the trade ministry.

"Although the safeguard measures are implemented, we will keep exporting to the US market, while seeking ways to expand our market share in Europe, Japan and Australia," said a senior official at Hanwha Q Cells Co., the nation's No. 1 solar cell maker.

The US government's remedy action faced backlash from domestic solar panel manufacturers over concerns that the rising costs would hamper solar power's competitiveness against other renewable energy sources.

The Solar Energy Industries Association, the national trade association for the US industry, said 30 percent tariffs on imported solar cells and panels will cause the loss of roughly 23,000 American jobs this year and result in the delay or cancellation of billions of dollars in solar investments.

"While tariffs in this case will not create adequate cell or module manufacturing to meet US demand, or keep foreign-owned Suniva and SolarWorld afloat, they will create a crisis in a part of our economy that has been thriving, which will ultimately cost tens of thousands of hard-working, blue-collar Americans their jobs," Abigail Ross Hopper, SEIA's President and CEO, said in a statement.

The trade dispute comes weeks before South Korea and the US

are set to hold the second round of talks to amend the bilateral free trade agreement at Washington's request. Trump has vowed to fix or scrap it in the past, calling it a "horrible" deal.

While talks are scheduled to be held in Seoul late January or early February, Kim drew a line between the safeguard action and the upcoming FTA negotiations.

"They should be considered as different matters as US company Whirlpool filed the safeguard petition, while KORUS FTA is a separate negotiation," Kim told reporters after the meeting. (Yonhap)


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