The Korea Herald is publishing a series of features and interviews on South Korea’s business environment for foreign companies and investors. This is the sixth installment. -- Ed.
South Korea should get rid of “too many pure Korea regulations” that hamper trade, and fully utilize the benefits of its free trade deals, according to the president of the European Chamber of Commerce in Korea.
“Sometimes, European companies hesitate to launch their new products here because there are too many ‘pure Korean regulations’ in Korea,” said Christoph Heider, president of the European Chamber of Commerce in Korea, in an interview with The Korea Herald.
“Pure” regulations refer to those that only exist in Korea, he said.
Heider has been the president of the ECCK since 2013 after serving as chief financial officer for Bayer Korea, a local unit of the German pharmaceutical firm, in Seoul.
He cited the Korean automobile sector, where European cars account for nearly 80 percent of the total number of imported cars.
“Korea has a rule that there should be space of higher than 12 centimeters between the lowest part of a vehicle -- except tires -- and the ground area,” he said.
Christoph Heider, president of the European Chamber of Commerce in Korea (Park Hyun-koo/The Korea Herald)
The rule remains, though it was made decades ago when road conditions were tougher. Due to this rule, some high-performance cars made in the US and Europe are not able to be sold here, limiting consumer choice, he said.
The Korean government is currently reviewing the regulation by comparing it with other nations, upon the suggestion of the ECCK and the European Commission, he added.
Another issue raised by the ECCK is related to imports of trucks and buses that have a width slightly wider than those set by Korean regulations.
“In Europe, the width of trucks and buses is 2.55 meters, while it is 2.5 meters in Korea. Due to the difference of 0.05 meters, European truck and bus makers cannot provide their full range in the Korean market,” he said.
“Although the issue was addressed multiple times by us, we never received proper explanation why 2.5 meters should be maintained,” he said.
The Transport Ministry, meanwhile, told The Korea Herald that the difference is due to Korea’s narrower roads and that foreign exporters are currently entering Korea by remodeling their cars.
In light of growing trade protectionism and a tougher tug-of-war between major economic players, the Korean government recently said that 50,000 American cars do not have to pass Korean safety standards once they comply with US standards. The change was made during negotiations to revise Korea’s free trade deal with the US.
European cars, however, would still have to pass Korean standards, though their test standards are very similar to those of the US, Heider said.
Other industries also show similar phenomenon, for example, the food sector.
For instance, Korea does not allow inclusion of phrases promoting awards on the labels of alcoholic beverages although records of winning prestigious awards are sometimes critical to promoting their products.
So, when foreign wine makers import their products to Korea, they have to put stickers on labels of every product to hide the phrase of awards.
“This has caused discontent among the foreign firms and we have asked the government over the last few years to relax the regulations. The government is now reviewing the rules,” he said.
Heider said the pure Korean regulations may harm both foreign firms and Korean exporters, which account for the bulk of Korean economy.
For foreign companies, they should learn about Korea’s specific regulations which cost them. For Korean companies, they also have to learn newly European regulations when exporting their products.
“This is why we believe international regulations are a win-win situation for all.”
By Shin Ji-hye (email@example.com