ed Trade protectionism

All countries should exercise restraint

Will the specter of trade protectionism haunt the world again as the global economic slump goes from bad to worse?

As things stand, countries around the world are shifting toward protectionism, apparently in efforts to protect and support their businesses. And a growing number of Korean companies are falling victim to these moves.

A striking feature of the new protectionism is the patent lawsuits against companies in newly emerging powerhouses. Samsung Electronics is a good example. The world’s largest memory chip and mobile phone manufacturer was ordered to pay more than $1 billion in compensation to Apple by a U.S. jury in a court in Silicon Valley who considered evidence regarding infringements of Apple’s smartphone design and patent rights.

Kolon Industries, the nation’s leading textile maker, also fell victim to a “patriotic’’ American ruling. In November last year, a U.S. court ordered the firm to pay U.S. chemical giant DuPont some $1 billion in damages for stealing trade secrets related to high-strength synthetic fibers. This is ridiculous because the compensation was more than 300 times the total amount of exports to the U.S. by Kolon over the last five years.

Last week, a federal judge in Virginia banned Kolon from producing and selling its version of the synthetic fiber, called Heracron, for 20 years. Fortunately, an injunction by the Korean company has been accepted and Kolon is able to resume the operation of its plants. Nonetheless, we see indications of chauvinism in the two rulings.

Traditional trade barriers are poised to trouble Korean businesses that are destined to stake their fortunes on exports owing to the narrow domestic markets.

The U.S. Commerce Department ruled last month that it will impose up to 82 percent of preliminary anti-dumping duties on refrigerators manufactured by Samsung, LG and Daewoo. Earlier, America’s Whirlpool complained that its market share has dipped to the single-digit level from 35 percent because Korean companies sold their products below market prices in the United States.

The French government also asked the European Union to impose restrictions on Korean motor vehicles upon complaints from its carmakers that their domestic market share has plunged.

As of the end of July this year, the number of import restrictions slapped on Korean companies reached 122 and in the first half alone, the figure hit an all-time high of 16.

This wave of trade protectionism will only lead to co-destruction around the world, casting a pall over the long-held principle of free trade. In this regard, all nations will have to exercise restraint within the framework of international cooperation. They need to voice a desperate global need to cherish the free trade principle whenever there are opportunities.

Needless to say, companies should try to shift from fast followers to first movers through broad-based innovation in order not to be compromised by patent lawsuits or trade disputes.

The government, for its part, needs to be more proactive in protesting rulings that are not in line with global standards and filing petitions with the World Trade Organization could be one option.