New US tariffs anger China, South Korea
Trading partners to complain to WTO
SEOUL: South Korea said yesterday that it would complain to the World Trade Organization (WTO) over US President Donald Trump’s decision to slap steep tariffs on imported washing machines and solar panels, and China called the US move an overreaction.
US trade policy, especially the use of punitive duties, has led to a growing list of reproaches from trading partners concerned by Trump’s protectionist leanings.
“The latest safeguard measures are in violation to WTO rules,” South Korea’s Trade Minister Kim Hyun-chong said in a meeting with industry officials.
Trump’s tariffs have dealt a heavy blow to South Korea’s Samsung Electronics Co Ltd and LG Electronics Inc, who together sell between 2.5 million to three million washing machines annually to the United States, making around $1 billion in export earnings.
“The United States has opted for measures that put political considerations ahead of international standards,” Kim said. “The government will actively respond to the spread of protectionist measures to defend national interests.”
China, the world’s biggest solar panel producer, also responded swiftly to the US move, branding it an overreaction that would harm the global trade environment for affected products.
“The decision to adopt tougher tariffs this time is an abuse of trade remedy measures, and China expresses strong dissatisfaction regarding this,” Wang Hejun, head of the Trade Remedy and Investigation Bureau at the Chinese Commerce Ministry, said in a statement on its microblog.
“The adoption of restrictive measures against imported solar panels and washers is not only detrimental to the healthy development of the industries in the US, but will also worsen the global trade environment of relevant products,” he said.
“China will work with other WTO members to resolutely defend its legitimate interests in response to the erroneous US decision.”
India has also recently re-opened a US dispute, alleging Washington has failed to comply with a ruling on solar power.
The decisions in the two “Section 201” safeguard cases for washing machines and solar cells came after the US International Trade Commission (ITC) found that imported products were “a substantial cause of serious injury to domestic manufacturers.”
The tariffs being imposed on washing machines exceeded the harshest recommendations from ITC members, while the solar tariffs were lower than domestic producers had hoped for.
Trump ignored a recommendation from the ITC to exclude South Koreanproduced washing machines from LG from the tariffs.
The United States will impose a 20% tariff on the first 1.2 million imported large residential washers in the first year, and a 50% tariff on machines above that number. The tariffs decline to 16% and 40% respectively in the third year.
A 30% tariff will be imposed on imported solar cells and modules in the first year, with the tariffs declining to 15% by the fourth year. The tariff allows 2.5 gigawatts of unassembled solar cells to be imported tariff-free in each year.
Some analysts in Seoul believed Trump was intensifying pressure on its Asian ally to rely more on the United States when it comes to dealing with North Korea, and also to gain leverage renegotiating a bilateral free trade pact that Trump has previously labelled a “horrible” deal.
“Security and trade are linked to each other under Trump,” said Choi Wonmog, an international trade law expert at Ewha University.
A filing published by the WTO on Jan 12 showed South Korea had already asked for authorisation to impose annual trade sanctions worth at least $711 million on the United States, in response to the dispute over washing machines.
South Korea also asked for permission to impose an open-ended amount of trade sanctions if Washington broke the same rules again with regard to other products.
Both Samsung Electronics and LG Electronics expressed concern over the US action, saying it would hurt American consumers and jobs.
South Korea has already demanded compensation because the United States had failed to meet a Dec 26 deadline to comply with a ruling against duties of up to 82% it had earlier imposed on appliances made by Samsung, LG and Dongbu Daewoo Electronics.