South Korea Involved in Anti-dumping War between U.S. and China

According to the Ministry of Commerce of China, the United States and the EU filed no less than 12 anti-dumping suits against China between January 1 and May 6 this year. The number already exceeded last year’s total by a margin of one. More recently, the U.S. imposed anti-dumping duties of up to 500% or so against Chinese steelmakers while levying those of up to 48% against South Korean steelmakers. In other words, trade disputes between the U.S. and China are negatively affecting the South Korean companies.

Besides, the Japanese government is looking to take a similar action against Chinese steelmakers according to the Nihon Keizai Shimbun. This implies the U.S. and Japan are strengthening their alliance against China.

Experts point out that the ongoing trade disputes between the two superpowers are because their race for international trade governance ignited last year with the conclusion of the Trans-Pacific Partnership (TPP), a U.S.-led multilateral free trade agreement (FTA), is going on with the upcoming U.S. presidential election around the corner. Some of them also say that the U.S., Japan and the EU are trying to prevent China from having the Market Economy Status (MES) that is scheduled to be automatically given by the World Trade Organization (WTO) in December this year, the 15th anniversary of China’s accession to the WTO. China, on its part, has grumbled that its lack of the MES has resulted in lots of dumping determinations, in spite of export prices higher than domestic prices, in Western countries claiming that the prices of goods in China do not reflect market principles. At present, a total of 81 countries, including South Korea, are applying the MES to China unlike most developed economies.

South Korean steelmakers are grumbling, too. According to them, the U.S. tends to impose anti-dumping duties against them when aiming at China in order to pretend not to bash China. Their difficulties are on the rise with the South Korean government regarding the steel industry as a sector where supply overwhelms demand and planning to move ahead with restructuring in it. Under the circumstances, they are frustrated by the anti-dumping duties. POSCO and Dongbu Steel have to accept a duty of as high as 28%, which is the average of 48% to be applied to Hyundai Steel and 8.75% to be applied to Dongkuk Steel. Hyundai Steel is opposed to the result of the anti-dumping investigation covering itself and Dongkuk Steel, claiming that its special business structure, that is, supply to the Hyundai Motor Group, was not reflected in the investigation at all.

In this regard, the South Korean government needs to pay heed to trade disputes that can be related to corporate restructuring as well. Late last month, the OECD called for the government to give an explanation for its support for Daewoo Shipbuilding & Marine Engineering via state-run financial institutions. This was sewn up well, but disputes can arise at any time given the South Korean economy’s high level of dependence on export and the pace of industrial restructuring currently in progress. During the first four months of this year alone, South Korea has been subject to 13 anti-dumping investigations or restrictions.