The United States has requested a bilateral consultation with the Korean Fair Trade Commission (FTC), saying that the fair trade watchdog failed to guarantee U.S. companies sufficient defense rights when investigating them for alleged unfair conducts.
The United States did not explicitly state the reason for its action, but some experts say that it had to do with Qualcomm.
The United States Trade Representative (USTR) said on March 15 (local time) that it requested a consultation with the Korean government on "competition-related issues" of the Korea-U.S. Free Trade Agreement (Chapter 16). Although the USTR had raised questions about competition issues in various ways in the past, it is the first time since the formal effectuation of the FTA that it requested a formal consultation. The Korea-U.S. FTA stipulates that if a consultation was requested by one party, the other party should accept it.
The USTR asserted that some of the Korean FTC's hearings did not guarantee certain rights to U.S. stakeholders, including an opportunity to review and refute adverse evidence against them, thereby hindering American stakeholders from defending themselves.
The USTR cited Article 13 (1) of the Korea-U.S. FTA, which guarantees a defendant an opportunity to present evidence to defend itself and make a case in an administrative hearing convened to determine whether it violated the competition act.
The USTR also said that it wanted the Korean system to be changed to prevent trade secrets and other related materials from being disclosed to third parties during investigations.
Although the USTR did not specify an FTC investigation, some experts say that its action was prompted by the FTC investigation into Qualcomm. In December 2016, the FTC ordered Qualcomm to pay 1,030 billion won in fine for impeding fair competition by abusing its market dominance. Qualcomm has filed a lawsuit with the Korean court in protest of the ruling. Qualcomm has asserted that the company has not been given sufficient defense rights during the investigation.