The government, racking its brain to reanimate languid exports, has entered into a war against nontariff trade barriers in other countries
By Choi Sung-jin
Beginning early this month, the Ministry of Trade, Industry and Energy started thorough probes of the nontariff barriers of major trading partners and set up a counter-strategy, officials said.
Overseas offices of the Korea Trade-Investment Promotion Agency (KOTRA) and commercial attaches at Korean embassies are holding meetings with Korean companies operating in the countries as well as conducting surveys.
One agency playing a central role in the government efforts is the Korean Agency for Technology and Standards (KATS), which is busy collecting and analyzing examples of technical barriers to trade, or TBT, which are “hidden” in free trade agreements that Korea has joined or is expected to join soon, the officials said.
“Nontariff barriers, such as technological standards, are replacing traditional trade barriers to emerge as new causes of trade friction,” a ministry official said. According to a ministry report released Thursday, the number of TBT notified to the World Trade Organization (WTO) by member countries had remained at fewer than 1,000 a year until the mid-2000s but jumped to about 2,000 after 2010.
Also on the rise are special trade concerns, or STC, which refer to formal objections raised by WTO members to technical barriers to trade set up by other members. Among such special trade concerns, most noticeable were newly erected TBT without notification to the world trade body. The number of such examples totaled 19 last year, the highest, indicating more countries have blocked the exports of other countries by building TBT in clandestine ways.
Triggering Seoul’s move was the Chinese government’s decision early this year not to give subsidies to electric-car batteries made by Korean companies. In January, Beijing decided to subsidize only LFP electric bus batteries made mostly by Chinese companies while excluding NCM batteries supplied by Korean makers such as LG Chemical and Samsung SDI.
“Since then, we have reached a consensus to make an overall checkup of nontariff barriers,” the ministry official said. One of the agenda items at a meeting of ministers responsible for international economic relationships, held on April 7, was China’s nontariff trade barriers and countermeasures, he said, adding that it was rather rare the meeting dealt with a specific country’s nontariff barriers.
Korea has signed free trade agreements with almost all its important partners, including the United States, China and the European Union, meaning it cannot expect to increase exports by lowering tariff rates, and the only way left is to open new routes through tearing down nontariff barriers, the official said. “As the U.S. pressured Korea to abolish automobile-related regulations, now is the time for Korea to deal preemptively with underdeveloped technological standards of other countries,” he said.
There have also been some results. Last year, the government raised eight cases of special trade concerns against China, India and other countries, and broke down two trade barriers.
In 2014, for example, the Chinese government banned the attachment of sticker-type labels to cosmetics, called “over-labeling” by the industry, forcing Korean and other exporters to spend more money on separate packaging of products shipped to China. Beijing lifted the ban late last year, yielding to persistent efforts by the Korean government and business officials.