US, EU protectionism hurts Korea

The Korea Times

The Korea Times

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Sat, September 30, 2023 | 19:40

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US, EU protectionism hurts Korea

Posted : 2012-09-02 18:09

Updated :

The United States and Europe are taking what amounts by many standards to be protectionist moves against Korean firms.

A.U.S. court Friday ordered the Korean firm Kolon to cease and desist manufacturing an aramid fiber, which allegedly infringes on DuPont's Heracron patents, for 20 years.

By Kim Tae-jong

The United States and Europe are taking what amounts by many standards to be protectionist moves against Korean firms.

A number of local companies are finding themselves subject to punitive court and government rulings in the recession-hit U.S. ahead of its Nov. 6 presidential election.

Some members of the European Union are also targeting Korean firms in efforts to protect their industries but Korean companies see this as acts of protectionism.

Korea’s leading textile maker Kolon was ordered by a U.S. court Friday to cease and desist making aramid fiber, material used for aerospace and military applications, for 20 years due to patent infringement. Days before the decision, an American jury ruled that Samsung Electronics should pay $1.05 billion to Apple, also in a patent case.

There are different views over the decisions but a growing number of experts have expressed concern over the spread of protectionism among advanced countries. Local firms have been involved in trade disputes in many countries this year in such fields as automobiles, steel, chemicals and electronics.

“Global firms have been in trouble for two main reasons. One is the prolonged economic slowdown and the other is emerging competitors that threaten their presence in the market,” Yang Soo-gil, chairman of the Korea Pacific Economic Cooperation Council, said. “That’s why global firms have tried to keep Korean companies from expanding their presence in order to survive the hard times.”

Yang, who also serves as chairman of the Presidential Committee on Green Growth and was a former chairman of the National Strategy Institute, said local companies should be better prepared for fiercer competition with international firms.

“Korean firms used to chase top brands as a minor player but things are changing and leading global companies have been intimidated by the growing presence of local firms,” he said. “Therefore, Korean firms should be equipped with more advanced plans to meet global standard and compete with their rivals.”

According to recent data, as of July, 122 cases have been reported in which Korean products were subject to anti-dumping and safeguard measures.

The U.S. Commerce Department ruled last month it will levy preliminary anti-dumping duties on Korea’s three leading washing machine manufacturers _ Samsung Electronics, LG Electronics and Daewoo Electronics _ of up to 82.41 percent, as American manufacturer Whirlpool claimed they were selling their items at heavily discounted prices in the U.S.

The EU is also examining a request by France to require the Korea government to give advanced warning of planned car exports to the region as a pre-step for the reintroduction of tariffs, after growing sales of Korean cars are believed to have put pressure on French carmakers that have lost domestic market share.

But outside the U.S., courts have reached different verdicts. A Japanese district court ruled Friday that Samsung did not infringe on patents belonging to Apple.

“The amount of compensation to be paid by Samsung and Kolon is the 10th-largest ever ordered in the States since 1995,” Shin Min-young, research fellow at LG Economic Research Institute, said. “Firms from Korea have been regulated as they have grown to threaten competitors in other countries.”

Experts warn that protectionism will only worsen the sluggish global economy.

“Protectionism typically prevails during economic slowdowns. The worst came during the Great Depression,” said Yun Chang-hyun, a professor at the University of Seoul. “Each country now tries to increase exports while reducing imports to protect their industries through protectionist policies but such selfish measures only have a negative impact on the global economy.”

To tactfully cope with protectionism, companies should hold various marketing campaigns to enhance brand awareness in other countries such as corporate social responsibility activities and in a more aggressive way take legal steps such as filing suits with the World Trade Organization, he said.

“The government should also help local firms if they are hit by unfair protectionist measures officially through diplomatic trade channels.”

Lee Chae-woong, a professor at Sungkyunkwan University, also suggested local firms should learn to adapt.

“The rules of the game have changed,” he said. “In the past, enhancing productivity by working hard was the key to being competitive but now advanced countries try to stay competitive with new weapons such as design and patents. So, local firms should be prepared for these new rules to fight them.”

e3dward@koreatimes.co.kr