Concerns are mounting here over the impact on Korea’s manufacturing exporters of the intensifying trade dispute between the U.S. and China.

Seoul has already been under growing pressure from Washington to make more earnest and persistent effort toward reducing the widening trade imbalance between the two sides.


Experts here worry that the discord between the world’s largest and second biggest economies will amplify the U.S.’ trade pressure on Korea, which remains heavily reliant on exports for growth.

A recent decision by Washington to impose antidumping duties on three Korean steelmakers along with Chinese steel companies may be seen as a prelude to similar patterns of measures to be taken in the coming months.

Aside from steel products, Korea and China have many manufactured and intermediary goods as their key export items for the U.S. market. Among them are smartphones, memory chips, machinery parts and car parts, which have contributed to expanding the two countries’ trade surplus with the U.S.

Momentum toward trade protectionism is expected to strengthen in the run-up to the U.S. presidential election in November.

“Calls for trade remedies such as the imposition of antidumping duties and the invocation of safe guards will grow following the election,” said Je Hyun-jung, a researcher at the Korea International Trade Association, in a recent report.

Many experts urge the government to step up efforts to convince Washington in an objective manner that it can be unreasonable to put Korea and China on the same footing.

In a report released in April, Third Way, a Washington-based centrist think tank, described Korea as the worst trading partner for the U.S. The report noted a free trade agreement with Korea had proved the most disadvantageous among the 17 trade deals Washington has concluded with foreign countries over the past decades. Korea’s trade surplus with the U.S. jumped to $28.3 billion last year from $15.2 billion in 2012, when the bilateral trade accord took effect. U.S. data released early this month showed that the U.S. trade deficit with Korea amounted to a record monthly high of $3.28 billion in April.

The think tank’s negative view is certain to be affirmed by President Barack Obama’s administration, which plans to announce later this month a report to evaluate the effects of the U.S.’ trade accords.

“Negative conclusions in the planned report would lead to strengthening U.S. trade defense measures,” said an official at the Ministry of Trade, Industry and Energy, speaking on condition of anonymity.

The number of antidumping and countervailing duties investigations launched by the U.S. against Korean companies increased from 37 in 2014 to a record high of 64 last year. The record is set to be broken this year, with the number reaching 36 for the first five months of the year.

Trade Minister Joo Hyung-hwan is considering visiting the U.S. within the year to give explanations to administration, congressional and corporate officials on the actual effects of the bilateral trade deal, ministry officials say.

They note the U.S. service account surplus with Korea increased by 14 percent over the past four years to exceed $1.1 billion in 2015. The amount of investments by Korean companies in the U.S. since the effectuation of the free trade accord has more than doubled U.S. investments here.

Officials here also expect the trade imbalance between the two countries to be reduced significantly next year as Korea begins importing U.S. shale gas.

Experts still suggest the government should do more to fully implement the trade pact with Washington, particularly in deregulation, recalling that the U.S. ambassador to Seoul recently made a public complaint that Korea still remains a difficult place for foreigners to do business.

The country is also likely to find itself squeezed between Washington and Beijing over U.S. requests to jointly cope with China’s unfair trade practices. Industry sources say U.S. Assistant Secretary of Commerce Marcus Jadotte proposed a joint response to China’s subsidies for semiconductor chipmakers.

Trade Ministry officials here expect Washington to continue to raise issues on which it believes Seoul could back its arguments against China. But business circles seem cautious about being in step with the U.S. as many Korean companies might be held hostage to various nontariff trade barriers maintained by China. In this regard, critics say the Korea-China free trade deal that came into force this year should have been made at a higher level of liberalization.

By Kim Kyung-ho (khkim@heraldcorp.com)