Korea to take US safeguard tariffs to WTO

Samsung, LG to protest import restrictions

By Kang Seung-woo

Korea will file a petition with the World Trade Organization (WTO) against the U.S. government’s decision to slap tariffs on Korean residential washing machines, and solar cells and modules, the trade minister said, Tuesday.

Samsung Electronics and LG Electronics, falling victim to the protectionist moves steered by U.S. President Donald Trump, are also protesting the decision, claiming it will lead to a “great loss” for American consumers.

U.S. Trade Representative Robert Lighthizer said Monday that Trump has approved recommendations to impose safeguard tariffs on imports of large residential washing machines as well as solar cells and modules.

It is the first of its kind since the George W. Bush administration imposed steep tariffs on imported steel in 2002. Last May, Whirlpool filed a petition to the U.S. International Trade Commission (ITC), requesting safeguard.

The safeguard measure stipulates the first 1.2 million washers imported annually from each company will face a 20 percent tariff and all subsequent imports will have a tariff of 50 percent. The measure will last for three years.

The decision is much tougher than the ITC recommendations, which did not recommend a tariff on the first 1.2 million machines.

On imported solar cells and modules, the tariff rate will range from 15 percent to 30 percent over the next four years after the first 2.5 gigawatts.

“The U.S. decision to impose tariffs on Korean washers and solar panels is excessive and apparently constitutes a violation of WTO agreements,” Trade Minister Kim Hyun-chong said in a meeting with industry officials, adding the Korean government will aggressively respond to the protectionist measures.

“The U.S. government took actions in consideration of its domestic political situation, rather than abiding by international regulations. If we file the suit with the WTO, we will win the case.”

Kim previously worked as senior lawyer at the WTO’s Appellate Body Secretariat and Legal Affairs Division from 1999 to 2003.

Later in the day, Kim held a meeting with representatives from washer and solar cell makers as well as relevant ministries to seek measures to handle possible fallout from the trade restrictions.

Kim continued to criticize the U.S. safeguard decision after the emergency meeting.

“The ITC failed to show a clear link between increased imports of Korean products and serious harm to U.S. industry, but the Korean-made washing machines are forced to face import restrictions, which is contrary to agreements,” he said.

“In addition, it does not make sense that Korean companies have built or are building factories, but the U.S. government is damaging those that have promised to support his trade policies.”

Samsung and LG immediately threw down the gauntlet over the anti-dumping duties. As part of their efforts to curry favor with Trump, who has urged global and local firms to build factories on U.S. soil to create jobs, the two have been building their own plants there.

Samsung’s new washer plant in South Carolina began operations earlier this month, and LG also plans to move up the opening date of its Tennessee factory to the final quarter of the year.

“Today’s announcement is a great loss for American consumers and workers. This tariff is a tax on every consumer who wants to buy a washing machine. Everyone will pay more, with fewer choices,” Samsung said in a statement.

“Consumers are choosing Samsung premium washing machines for their innovation and design.”

LG also said washer import restrictions will harm American jobs.

“We are very disappointed in this misguided decision, which far exceeds what the expert agency (the ITC) recommended. This is a textbook case about how certain companies can game the process to use trade laws to try to accomplish what they can’t accomplish in the marketplace,” LG said.

“LG is building its U.S. washer manufacturing facility in Clarksville, Tennessee, the most advanced factory in the world. The result of this case hinders the ramp-up of the new plant and threatens many new U.S. jobs. And the result also harms iconic American retailers that depend upon the sale of LG washers.”

The company also said that customers should be the ones to decide what washers they want to buy based upon their own preferences.

“Millions of Americans love their LG washers because of their innovative features, efficiency, styling and connectivity,” it said.

When announcing the safeguard measures, Lighthizer said, “the president’s action makes clear again that the Trump administration will always defend American workers, farmers, ranchers and businesses in this regard.”

The local solar panel makers also expressed concerns that their exports to the U.S. market will be hit hard by the tariffs. In 2017, they exported $1.3 billion in solar cells to the U.S.

“Although the safeguard measures are implemented, we will keep exporting to the U.S. market, while seeking ways to expand our market share in Europe, Japan and Australia,” said a senior official at Hanwha Q CELLS, the nation’s top solar cell maker.