Trial for Retaliatory Tariffs

The South Korean government filed a complaint with the WTO regarding U.S. safeguard measures on washing machines and photovoltaic cells and modules in about a month after its application for suspension of concession worth US$480 million on April 6.

The Ministry of Trade, Industry & Energy announced on May 14 that it brought the case to the WTO Dispute Settlement Body. In addition, the ministry sent a request for consultations to the U.S. government and notified the WTO Secretariat of the fact.

The Korean government has filed a complaint with the WTO regarding U.S. safeguard measures on washing machines and photovoltaic cells and modules.
The Korean government has filed a complaint with the WTO regarding U.S. safeguard measures on washing machines and photovoltaic cells and modules.

The safeguard measures became effective on February 7. When it comes to finished washing machines, a 20% tariff is imposed on a quota of 1.2 million units and the tariff rate on the extra amount goes up to 50%. The rates are 18% and 45% in the second year and 16% and 40% in the third year, respectively. As far as washing machine components are concerned, the rate applied to the extra amount is 50%, 45% and 40% in the first, second and following years with 50,000, 70,000 and 90,000 unit quotas applied, respectively.

The quota applied to photovoltaic cells is 2.5 GW and 30%, 25%, 20% and 15% are imposed on the extra amount from the first to fourth year. No quota is applied to photovoltaic modules along with the same rates.

The South Korean government had a consultation with the U.S. government on February 1 for nullification or compensation. However, they failed to reach an agreement, and the former notified the WTO of its plan for the suspension of concession on April 6. The South Korean government can immediately impose retaliatory tariffs once it wins the case at the Dispute Settlement Body.

Some experts point out that its final decision is likely to take at least two years and, as such, the South Korean government’s plan for the retaliatory tariffs is likely to fizzle out. The U.S. safeguard measures on washing machines and the cells and modules are effective for three and four years, respectively.

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