Amid the rising tide of protectionism, a growing number of Korean companies are becoming the targets of protectionist measures in their major overseas markets, including the United States and China.
Last week, the U.S. government took a series of harsh measures against Korean exporters. Notably, the Department of Commerce introduced high anti-dumping and countervailing duties on cold-rolled steel plates produced by POSCO and Hyundai Steel on Wednesday.
The duties amounted to 64.7 percent for POSCO and 38.2 percent for Hyundai Steel. The rates were much higher than those the department determined in its preliminary report in March. At the time it said it would levy 6.89 percent on POSCO and 2.17 percent on Hyundai Steel.
The department also set the penalties for other unnamed Korean companies at 24.2 percent. The final duties for Korean companies will be fixed by the U.S. International Trade Commission in early September.
If the ITC upholds the Commerce Department’s conclusion, it will deal a harsh blow to U.S. exports of cold-rolled steel plates by POSCO and Hyundai Steel.
On Thursday, the ITC upheld the department’s decision to impose anti-dumping duties of up to 48 percent on corrosion-resistant steel imports from Korea.
In its final report in May, the department said it would levy a 47.8 percent duty on Hyundai Steel and 8.75 percent on Dongkuk Steel.
Washington is set to take action on other steel products from Korea, including hot-rolled plates and thick plates. The sharp hike in penalties slapped on cold-rolled steel plates bodes ill for these products.
Last week, the Commerce Department also set preliminary anti-dumping charges on washing machines from Samsung Electronics and LG Electronics. The duties were punitively high -- 111 percent for Samsung and 49 percent for LG.
The two Korean companies said they would clarify the dumping charges against them before the release of the department’s final report in December.
In 2013, the U.S. government imposed up to 13 percent anti-dumping duties on Samsung and LG washing machines. But the companies resisted, filing a suit with the World Trade Organization.
In March this year, the WTO ruled in their favor, saying that the U.S. government breached its rules. Yet the ruling failed to put an end to the dispute.
In the U.S., trade protectionism has been gaining force, fueled by the growing sentiment against globalization. The outcry against free trade has been especially fanned by politicians in the run-up to the presidential election in December.
The Commerce Department has increased its workforce in anticipation of a surge in the number of U.S. firms filing anti-dumping petitions against foreign exporters.
The U.S. is not alone in moving away from globalization and free trade toward isolation and protectionism. This trend has been manifested by the recent decision of the United Kingdom to leave the European Union.
The rising tide of protectionism poses serious challenges to Korean companies. Korean exporters have already been hit by the prolonging global economic slowdown. As the external environment surrounding them is likely to worsen, they may have to review their business strategies.
One way to overcome protectionism is localization. In May, General Electric CEO Jeffrey Immelt said his company would localize production in big end-use markets in the face of a protectionist global environment.
The localization strategy has deep implications for the Korean government. It should think hard how it should adapt to the changing global economy to ensure the sustained growth of the Korean economy.
