Martial Arts "Need to Improve the Operational System of Trade Remedy Measures"... Policy Seminar on System Improvement Topics

The Need to Strengthen Regulations on Foreign Products Circumventing South Korea's Import Restrictions

[Asia Economy Reporter Sunmi Park] On the 20th, the Korea International Trade Association jointly held a policy seminar with the International Economic Law Society on the theme of "The Necessity and Direction of Institutional Improvement to Secure the Effectiveness of Trade Remedy Systems."

The trade remedy system is a regulatory measure that imposes tariffs or restricts import volumes on imported goods when domestic industries suffer damage or are at risk of damage due to foreign imports. This includes anti-dumping, countervailing duties, and safeguards.

According to the association, South Korea has yet to conduct any countervailing duty investigations on foreign products, and has not implemented any safeguard measures since 2002. In the case of the anti-dumping system, South Korea conducts about 2.5 new investigations annually, which contrasts with the approximately 20 anti-dumping investigations conducted annually against South Korean exports worldwide.

Recently, countries around the world have been actively regulating acts intended to circumvent anti-dumping and countervailing duty measures. Although there are no WTO-level regulations on circumvention, the United States and the European Union (EU) have independently enforced circumvention regulations since the late 1980s, and since 2010, countries such as India, Australia, and Canada have also introduced and implemented related systems.

In the opening remarks, Cho Sang-hyun, Director of the International Trade Research Institute at the Korea International Trade Association, stated, "Trade remedy measures worldwide are becoming increasingly routine," adding, "It is necessary to reassess the effectiveness of Korea’s trade remedy system and improve its operational framework so that it can serve as a shield for our companies."

In the following session, presentations and discussions were held on two topics: the necessity and issues of introducing a circumvention anti-dumping system, and the problem of circumventing anti-dumping measures through bonded factories and corresponding responses. Circumvention dumping refers to a series of acts by foreign exporters to evade anti-dumping measures imposed by the importing country. In the United States, a total of 63 circumvention anti-dumping investigations were conducted from 2005 to 2021, but South Korea’s current Customs Act does not have provisions regulating circumvention dumping.

Regarding this, Professor Kang Jun-ha of Hongik University said, "South Korea lacks relevant regulations, causing inefficiencies such as having to initiate new original investigations when circumvention acts occur," and added, "It is necessary to consider introducing related systems by referring to the cases of major countries such as the United States, the EU, and India that have introduced or revised circumvention anti-dumping regulations."

Professor Lee Hyo-young of the Korea National Diplomatic Academy, who presented on the issue of circumvention of anti-dumping through bonded factories, emphasized, "Even when products subject to anti-dumping duties are imported, processed, or manufactured in bonded factories and then brought into the domestic market, it is possible to evade anti-dumping duties," adding, "This undermines anti-dumping measures intended to protect domestic industries and correct unfair trade, so an amendment to the Customs Act is necessary."