'America First' clashes with heavy-handed Korea: US companies at odds with Korean regulators

Milosz Zurkowski

Recent developments in U.S.-Korea economic relations have spotlighted longstanding concerns among American investors and business leaders regarding Korean regulatory practices. In a closed-door deposition by the U.S. House Judiciary Committee involving executives from Coupang, a U.S.-based e-commerce giant operating in South Korea, allegations erupted over possible discriminatory treatment of American tech companies.

The session yielded no immediate sanctions, yet the episode has kept tensions simmering. It has amplified broader U.S.-Korea economic frictions, with Rep. Tim Burchett capturing the mood bluntly on social media: “I’m fed up with the South Korean government’s discriminatory targeting of American companies. If their businesses can sell here, ours should be able to compete fairly over there.”

At the heart of the matter is the claim that Korean regulations disproportionately burden U.S. companies while treating domestic conglomerates and Chinese competitors more favorably. Whether or not these allegations are fully substantiated, the perception alone carries real consequences, for both bilateral trust and Korea’s image as an attractive place to do business.

The scrutiny appears to be driven by the “America First” approach to economic policy under U.S. President Donald Trump, which focuses on protecting U.S. companies. Even good-faith regulatory actions abroad can now be recast as barriers to U.S. commercial interests, making once-technical or legal disputes more likely to be politicized and escalated.

These developments are unfolding against intensifying geopolitical competition, particularly the U.S.-China rivalry. In this environment, economic frictions are increasingly viewed through a strategic lens, giving bilateral regulatory concerns wider significance.

American companies operating in Korea often cite the following recurring frustrations: heavy-handed regulation, unpredictability, uneven enforcement and rigid labor laws.

First, many describe Korea’s regulatory environment as unusually aggressive. Agencies such as the Korea Fair Trade Commission and the Personal Information Protection Commission move swiftly and forcefully against large firms. While robust enforcement is common in advanced economies, U.S. executives sometimes complain that the scale and intensity of scrutiny is disproportionate, bordering on a compliance minefield.

Second, regulatory unpredictability compounds the challenge. Overlapping jurisdiction among agencies, evolving or unclear guidance in areas such as online platforms and financial regulation, and broad administrative discretion leaves executives guessing about compliance standards, increasing operational risk.

Third, there is the perception of uneven enforcement. Some U.S. stakeholders argue that foreign firms face more aggressive raids, higher fines and quicker criminal referrals than their domestic counterparts. Whether or not this reflects reality, the perception has gained traction in Washington.

Fourth, perceived labor law rigidity remains a persistent headache. For American companies accustomed to an employment-at-will system, Korea’s strong worker protections — including a strict “just cause” standard for termination — are seen as increasing costs and reducing flexibility.

These tensions reflect deeper structural differences. Korea’s economic success has historically combined strong industrial policy with active regulatory oversight, particularly in sectors deemed critical to national competitiveness.

By contrast, the United States has traditionally favored a more market-oriented approach, especially in technology. Accordingly, American firms may experience Korean regulatory initiatives as relatively interventionist.

The prominence of large domestic conglomerates can also foster a perception — fair or not — of a tilted playing field that favors entrenched local players, especially when enforcement actions against global U.S. firms draw international headlines.

This regulatory scrutiny has coincided with the U.S. Trade Representative’s March 11 announcement of an investigation into manufacturing overcapacity, naming Korea among 16 economies and signaling rising pressure across multiple fronts.

There is a certain irony in the dynamic: Even as Washington criticizes Korean regulatory practices as unfair, the United States itself is perceived by some allies as drifting from the rules-based international order it long championed.

Nevertheless, moments of friction can sometimes produce unexpected opportunities. The patent wars between Apple and Samsung Electronics come to mind. Initially seen as a major reputational risk for Korea, they ultimately helped to dispel the perception that Samsung merely copies Apple and reinforced Samsung’s global prestige as a technological leader.

Managed carefully, today’s tensions could similarly allow Korea to clarify its regulatory identity and strengthen its credibility as a rules-based, globally aligned economy.

It might be tempting to take a wait-and-see approach, since U.S. domestic politics remain fluid and policy direction may evolve. Potential shifts in congressional control following the upcoming midterm elections in November could influence the trajectory of American policy towards a less confrontational posture.

But Trump, who shapes the policy discourse, retains a loyal base, and economic enforcement tools are becoming more normalized regardless of political cycles.

Accordingly, Korea should seize the initiative and take steps to proactively address perceptions and shape the narrative.

It should consider boosting transparency by publishing clear, side-by-side statistics on enforcement actions against both domestic and foreign firms, proving that decisions rest on objective criteria rather than nationality.

It should enhance predictability through clearer interagency guidelines and consistent messaging, reducing the uncertainty that currently frustrates foreign investors.

Korea can engage early and aggressively with U.S. and other foreign stakeholders to identify concerns before they escalate into congressional hearings or formal investigations.

It can also align with global norms by situating Korean rules within broader international trends — such as Europe’s tough scrutiny of digital platforms — to counter any narrative of idiosyncratic enforcement.

Seoul should double down on rule-of-law credentials, emphasizing due process, judicial review and nondiscrimination. These principles remain among Korea’s strongest selling points as an investment destination and are already backed by solid international rankings.

Finally, Korea can frame regulatory activity within alliance management, signaling awareness of U.S. sensitivities and highlighting its contributions to shared supply chains and technological ecosystems, while emphasizing that its regulatory approach does not undermine broader economic and strategic cooperation.

These tensions reflect shifts in regulatory philosophy, perception and geopolitical competition. Addressing them demands careful calibration: defending legitimate policy objectives while ensuring transparency, predictability and fairness. Handled with foresight, this moment can strengthen mutual understanding and reinforce Korea’s appeal as an attractive destination for international business.

Milosz Zurkowski is a Polish-born, New York-licensed lawyer who has lived in Korea for over 20 years while working at leading Korean law firms including Kim & Chang and LIN. The opinions expressed here are the author’s own and do not represent those of his firm.