Korean Transformer Producers Expanding Investment in U.S.
The Korea International Trade Association has recently submitted an official request to the U.S. Department of Commerce that Korean transformers be excluded from the national security threat investigation under Section 232 of the Trade Expansion Act initiated for imported transformers and components.
The United States started an investigation into imported transformers and components on May 11 to determine if the imports threaten to impair national security. The decision was made based on the suspicion that a surge in bypass imports of electrical steel products from Mexico and Canada was intended to evade the Section 232 tariff on steel while the import dependency reached 85 percent as of 2010.
KITA said in its request, “Given the fact that Korean transformer manufacturers are expanding their investment in the United States while their exports are decreasing, there is no risk that Korean transformers will impair the national security of the United States. Therefore, Korea should not be subject to Section 232 measure.”
Hyundai Electric built a US$200 million transformer manufacturing plant in Alabama in 2011 and expanded its production volume in the United States. Hyosung acquired Mitsubishi's transformer plant in Tennessee for $47 million in December last year.
The KITA statement stressed, “The power grid is a core infrastructure related to national security. In order to stabilize the power grid, it is important to procure transformers and components from reliable suppliers,” adding, “Most Korean transformers use Korean-made parts and have passed the high quality standards of the United States. Korean transformer companies have built up trust by stably supplying to the US Power Authority for the past 40 years.”
It also pointed out, “Taking Section 232 measures to limit transformer and component imports would hinder the smooth supply of electricity in the United States and would increase burden to consumers with rising electricity prices.”
Shin Seung-kwan, head of the Center for Trade Studies and Cooperation, said, “The United States has recently stepped up its national security measures, such as initiating Section 232 investigation into imported transformers, components and vanadium following an issuance of an executive order intended to limit the use of foreign-supplied components in the nation's electric grid.” He also said, “We will convey the message that South Korea and the United States are strong security and economic allies. We will continue to carry out outreach activities to the United States to promote economic cooperation between the two countries.”