ED Inappropriate pressures
US request threatens free trade principle
The U.S. administration is taking flak for having asked global semiconductor makers including Samsung Electronics to submit data on their supply and demand, inventory, ordering and customer sectors. The White House made the request during a virtual meeting it hosted with representatives from major automobile and chip manufacturers, Thursday.
In the third of such meetings this year, the White House even indicated it would use compulsory measures based on the defense procurement act (DPA) unless the companies complied with its demands. U.S. Commerce Secretary Gina Raimondo cited the need for the U.S. to more actively address the worsening semiconductor shortage. “It is time to get more aggressive. The situation is not getting better, in some ways it is getting worse,” she said in an interview with Reuters.
Raimondo's request comes as the shortage in chip supplies has caused U.S. automakers to cut production, affecting thousands of U.S. workers. Yet, it is not proper for the American administration to call on global companies to release confidential business information. It is excessive market intervention by any other name.
The secretary explained the “voluntary request” was made in order to find a solution to the chip crisis. However, her statement can be taken to mean she is urging the companies to provide semiconductors first to U.S. automobile, mobile device and home appliance manufacturers, which are suffering setbacks due to cuts in production amid the lingering shortage of chips. The production stalemate has been worsening with the suspension of semiconductor assembly lines in Southeast Asia due to the persisting COVID-19 pandemic.
It is inappropriate for the U.S. to apply the coercive measure of asking for such data from global enterprises to protect its own domestic companies. The move is tantamount to undermining the values of free trade which the U.S. has so far vehemently advocated for. Should the U.S. administration insist on such an “America first” stance, it will likely inflict damage on other countries' companies including Korea's automakers Hyundai and Kia.
Since the onset of President Joe Biden's administration, the U.S. has focused on building up the semiconductor supply chain, describing it as “significant national infrastructure,” a move also motivated to prevent China from flexing its muscles in the chip sector. In response, Korea's Samsung Electronics was cooperative, with its plan to set up a foundry plant in the U.S.
Against this backdrop, Washington deserves the growing criticism against it for employing this forceful attitude while neglecting the spirit of its free trade agreements with other countries. Such a “haughty” move will also result in undercutting solidarity with its key allies ― such as Seoul ― as it will eventually create a mutually uncomfortable situation in the market.
Korean companies are facing growing difficulties in coping with the toughening stances of the U.S. amid intensifying global competition in the chip segment. Businesses and the government should combine their efforts in tackling the growing hardships by mobilizing all possible means including effective diplomatic maneuvering.