Seoul mulls taking China to WTO over THAAD retribution

The Korean government is contemplating filing a petition with the World Trade Organization over China‘s recent moves allegedly aimed to damage Korean businesses, following Seoul’s decision to bring a US anti-missile system here.

Following a meeting between the government and the ruling Liberty Korea Party on Tuesday morning, Lee Hyun-jae, the party’s policy chief, said Korea would “actively” consider the option.

China has been seen amplifying pressure on Korean businesses that depend heavily on Chinese consumers and those operating in China since the Korean Defense Ministry signed a land-swap deal with Lotte Group that would give it the property on which to install the controversial Terminal High Altitude Area Defense system here.

Coming alongside strong rhetoric from the Chinese government opposing the installation of the system, these unofficial moves have included a ban on Chinese travel agencies selling travel packages to Korea, sweeping safety inspections that have led to the closures of Korean-owned businesses in China and customs inspections that have turned back Korean products.

The Chinese government has remained firm that these measures are simply the application of existing laws. At a press conference Monday, China’s Foreign Ministry spokesman Geng Shuang said that despite widespread closings of Lotte Mart stores across the country, China protects foreign companies’ “lawful rights and interests in accordance with the law, as long as their businesses abide by laws and regulations.”

Meanwhile, the Seoul government said it would be providing emergency support for companies that have suffered from China’s “protectionist” measures.

The Trade Ministry held a task force meeting Tuesday to discuss the current situation with China and measures to reduce damage to Korean businesses.

Woo Tae-hee, Second Vice Minister of the Trade Ministry, spoke out at the meeting against Chinese protectionist measures, saying they went “against the spirit of the Korean-Chinese Free Trade Agreement, which benefits both countries.”

To alleviate pressure, the Small and Medium Business Administration will be providing up to 1 billion won ($872 million) in loans over five years for companies that have suffered from Chinese measures.

The Trade Ministry will also be publishing a booklet covering Chinese regulations regarding sanitation and safety to allow businesses to prepare themselves more carefully for inspections, under the premise that Chinese authorities appear to be stricter against Korean products. Small businesses will receive financial support for gaining certification to sell products on the Chinese market and have opportunities to meet with Chinese buyers through various industry events, the ministry said.

The Korea Trade-Investment Promotion Agency said Tuesday that it would also be “carefully monitoring” the trade flow between Korea and China to accurately assess the impact of THAAD-related tensions on Korean companies providing consumer products and services in China.

Reports from China indicate that consumers there are increasingly growing hostile toward Korean companies and products in the wake of THAAD developments. In addition to supermarkets and other distributors voluntarily pulling Lotte’s products from their shelves, consumers have been reportedly destroying Korean products or causing disruptions at Korean companies’ stores in China.

At a store selling Korean cosmetics, a Chinese couple reportedly screamed at the employee behind the counter for working for a Korean company. Videos depicting incidents like these are spreading via Chinese social media and fueling negative sentiment, according to news reports.

“Chinese consumers actively boycotting Korean products is the worst-case scenario,” said a spokesperson from a cosmetics company operating in China. “Tougher regulation by the authorities is difficult, but manageable. We are hoping that the situation will be resolved before it escalates into a consumer-driven boycott.” 

By Won Ho-jung (hjwon@heraldcorp.com)