American building material distributor Ace Hardware filed an official complaint against the South Korean government’s business mediation system, claiming that it is in violation of international investment standards.
Ace Hardware is a licensed ordering company in Home Center, South Korean ready-mixed concrete company Eugene Corporation’s building material business that has been halted for six years due to government regulations.
According to industry sources, Ace Hardware is planning to file a WTO complaint against the South Korean government. Under the circumstances, the government’s system for protecting small businesses is likely to cause a new trade dispute in the near future.
On May 4, Ace Hardware sent a letter to the U.S. Embassy in South Korea to point out what it saw as an unfair trade practice, officially protesting the Ministry of SMEs & Startups’ business mediation that blocked Eugene Corporation from entering the building material market.
“The six-year suspension is in violation of international rules and the principle of equitable treatment in view of the other global wholesalers and retailers in South Korea,” it said in the letter. Eugene Corporation filed an administrative lawsuit last month with the Seoul Administrative Court, too.
The U.S. Embassy in South Korea sent the letter to the Ministry of Trade, Industry & Energy, not the Ministry of SMEs & Startups, on May 12. This is said to be because the U.S. is regarding the matter as a trade issue. Ace Hardware is currently doing business in more than 60 countries and its sales amounted to approximately US$5 billion in 2016.