The rising trend of global trade protectionism is finally taking concret…
Time to settle disputes proactively
The U.S. Commerce Department last week decided to impose punitive tariffs on hot-rolled flat steel from seven countries, including Korea and Japan. The ruling, which could still be overturned by the U.S. International Trade Commission, was particularly painful to Korean steelmakers as POSCO, Korea’s top steelmaker, was slapped with 3.9 percent anti-dumping duties and 57 percent anti-subsidy duties. Hyundai Steel was charged with 9.5 percent anti-dumping duties and 3.9 percent anti-subsidy tariffs.
The tariffs are almost certain to push Korean steelmakers, especially POSCO, out of the American market because a large chunk of its hot-rolled steel is exported to the U.S.
In July, the U.S. department also imposed 65 percent punitive tariffs on POSCO’s cold-rolled steel, which is used for cars and home appliances. Earlier, the department accused Samsung and LG of dumping Chinese-made washing machines in the U.S. in a preliminary ruling.
Trade protectionism is certainly a global phenomenon as major countries increasingly erect barriers amid a global supply glut. According to the World Trade Organization, the world’s 20 major economies, or G20, initiated 21 trade-restricting steps a month on average from last October to May, the largest number since the WTO began compiling related data.
The U.S. took the largest number of trade-restricting steps last year with 90, according to a Global Trade Alert report released by the Center for Economic Policy Research. It’s no wonder that small, open economies like Korea are hit hardest by trade protectionism. Of the 4,000 measures governments have taken to restrict trade since the 2008 global financial crisis, nearly 1,000 have involved Korea.
The problem is that nowhere can export-reliant Korea find alternative markets. Exports to China, Korea’s largest trading partner, have remained sluggish owing to its economic slowdown, but the simmering conflict over Seoul’s deployment of an advanced U.S. missile defense system makes the export outlook all the more gloomy. Trade circumstances in the European Union hardly look good in the aftermath of Britain’s vote to leave the EU.
Most worrisome is that Washington will retreat significantly from the Obama administration’s overall free trade stance whoever becomes the U.S. president in November. Republican presidential nominee Donald Trump, in particular, would be a serious headache if he is elected, given his accusation Monday of the Korea-U.S. free trade agreement as a perfect example of “broken promises.”
Korea will of course have limitations in steering the world clear of protectionism. But our trade negotiators should not sit on their hands, just looking at America’s trade offensives merely as brawls between companies.
It will be necessary for them to settle trade disputes proactively by expanding dialogue channels with their foreign counterparts before it’s too late. Korean companies, for their part, need to consider taking legal action, including filing a petition with the WTO.
The more fundamental solution would be to reorganize our industrial structure in such a direction as to lower our dependency on trade, no matter how long it takes.