[News Analysis] US steel tariff reveals loophole in Seoul’s trade action plan

Amid the fallout of the US administration’s latest tariff on all steel imports, the South Korean government is facing criticism for its “lax” countermeasures to an issue that is likely to cause multitrillion won losses to local industries over the upcoming years.

The key problem, observers say, is the lack of a policy headquarters, as the presidential office Cheong Wa Dae remains reluctant to raise government-level conflicts with Washington amid ongoing denuclearization talks concerning North Korea.

Minister of Trade, Industry and Energy Paik Un-gyu said Friday that Seoul would consider filing a complaint with the World Trade Organization, expressing regret over US President Donald Trump’s recent activation of a 25 percent tariff on steel imports.

“If this action takes effect, it would inevitably deal a serious blow to South Korean steel exports to the US,” Paik said. “We will actively consider taking group action with other countries affected by the latest move.”
 

Having shipped some 3.6 million tons of steel products to the US last year, South Korea is currently the third-largest steel exporter to the US, following Canada and Brazil, according to the US Department of Commerce.

The extra tariff measure is expected to cost Asia’s fourth-largest economy economic impact amounting to 7.23 trillion won ($6.76 billion) over the next three years, the Hyundai Research Institute said in a report.

Despite the looming consequences, the Trade Ministry was apparently the only government body that addressed the issue directly.

Deputy Prime Minister and Finance Minister Kim Dong-yeon said that he is “taking (the steel tariff issue) seriously” and pledged to “exert the best efforts” to talk the US out of the plan, but remained passive, leaving the Trade Ministry in control.

The disparity in the stances of the ministries could be attributable to the Moon Jae-in administration’s apparent move to prioritize between national security and trade issues in order to prevent tariff brawls from disturbing the denuclearization issue.

The delicate situation could have largely discouraged the nation’s finance headquarters from raising its voice on the tariff dispute, according to observers.

The sole player left in charge of the tariff issue was therefore Trade Minister Kim Hyun-chong, vice ministerial policymaker in trade affairs, who has visited Washington twice in the past two weeks in an effort to reach out to US lawmakers, government counterparts and economic organizations.

Despite Kim’s expertise as trade chief and personal network, concerns persisted that his efforts would be insufficient to counter Trump’s trade blows, unless with strategic assistance.

In contrast to Seoul’s two-way approach, other major steel exporters such as Japan, Australia and Canada earlier vowed joint efforts on the summit-level, an effort which apparently spared Canada from the extra tariff measure.

“Outreach activities are always essential, whether or not in times of crisis,” said Cheong In-kyo, vice president and professor of economics at Inha University.

“The fact that (the ministry) touts them as a countermeasure shows that the government is currently void of a proper trade negotiating system.”

The Trade Ministry has since late last year tried to expand its trade negotiation headquarters and establish a new trade strategy team under it, but the plan is still pending due to disputes on budget and government organization efficiency.

“Even if the new trade strategy team was to kick off, the problem is that there are few civil experts who are likely to join the operations,” said Ahn Duk-geun, a professor at Seoul National University’s Graduate School of International Studies.

“Also, (the given job) imposes a three-year restriction from taking another job in related fields, so competent experts are likely to shirk the position.”

By Bae Hyun-jung (tellme@heraldcorp.com)