Controversy Over 'Coupang Owner' Citing Korea-US FTA... Ministry of Trade Reviews Possible Agreement Violation

Fair Trade Commission Reviews Designation of Kim Beom-seok as Coupang Owner... Ministry of Trade Examines Possible Violation of US-Korea FTA 'Most-Favored-Nation Treatment'

[Sejong=Asia Economy Reporter Kwon Haeyoung] The Ministry of Trade, Industry and Energy has begun reviewing whether the Korea-U.S. Free Trade Agreement (FTA) 'Most-Favored-Nation Treatment' clause might be violated in relation to the Fair Trade Commission's possibility of designating Kim Beom-seok, Chairman of Coupang's Board, as the controlling shareholder.

On the 21st, a ministry official stated, "We are reviewing the facts regarding the Fair Trade Commission's designation of Coupang's controlling shareholder and the possibility of violating the Korea-U.S. FTA."

Last year, the Fair Trade Commission plans to designate Coupang, whose assets exceeded 5 trillion won, as a large business group on the 30th. The key issue is the designation of the controlling shareholder, and the Fair Trade Commission is deliberating whether to designate 'Chairman Kim' or the 'Coupang corporation' as the controlling shareholder.

The problem is that Chairman Kim holds U.S. nationality, so if the Fair Trade Commission designates him as the controlling shareholder, it may conflict with the Most-Favored-Nation Treatment clause of the Korea-U.S. FTA.

The Fair Trade Commission has never before designated a foreign national as the controlling shareholder. Previously, foreign-invested companies such as S-Oil (majority shareholder Aramco) and Korea GM (majority shareholder General Motors) were designated as large business groups without a controlling shareholder. Coupang is already listed on the U.S. stock market, with transparent disclosure of management information. If designated as the controlling shareholder, disclosure obligations would arise for the spouse, relatives within six degrees of kinship, and relatives within four degrees of affinity, among other strengthened regulations. The U.S. could raise equity concerns, arguing that such treatment is unfavorable to its companies.

For these reasons, the Ministry of Trade, Industry and Energy is proactively examining the issue of Coupang's controlling shareholder designation to prepare for potential future Korea-U.S. trade frictions. Although there has been no separate inquiry from the Fair Trade Commission, the ministry judged it necessary to independently review potential trade conflict issues in advance.

Professor Choi Wonmok of Ewha Womans University Law School explained, "The founder of Coupang is a U.S. national and, as an investor who invested domestically, has the right not to be discriminated against. If the Fair Trade Commission, which has never designated a foreign investor as the controlling shareholder, designates the Coupang founder as such, it would constitute discrimination against other foreign-invested companies in investment and competition and could be seen as a violation of the Korea-U.S. FTA."