Korea Federation of SMEs Holds '2025 First Fair Trade Promotion Committee' Meeting

Call for Legislative Improvements to Ensure Effective Implementation of the Supply Price Indexation System on the Ground

The Korea Federation of SMEs announced on June 11 that it held the '2025 First Fair Trade Promotion Committee' meeting at the Yeouido headquarters. The Fair Trade Promotion Committee, newly launched this year, aims to improve unfair trade practices between large corporations and SMEs and to develop measures for mutual growth. The committee plans to identify policy tasks and promote institutional improvements based on industry field opinions and expert insights.

Jung Hanseong, Chairman of the Korea Fastener Industry Cooperative, was appointed as the committee chair to represent the SME sector. The committee has been newly formed with 20 members from the industry, academia, legal, and research sectors, including the chair, and will be active for the next two years.

During the meeting, there was an in-depth discussion on measures to promote the supply price indexation system, which has been in effect since October 4, 2023, to foster a culture of mutual cooperation between large corporations and SMEs. Committee members pointed out that "the indexation system is limited to material costs, so industries where expenses make up a large portion of supply costs are left in a blind spot." They also stated, "For root technology companies, many of which use electricity as a primary raw material, it is urgent to include electricity and other energy costs in the scope of the supply price indexation system through legislative amendments."

Additionally, members noted, "Although the current indexation system is a mandatory regulation, there is a loophole in that it may not be applied if the principal and subcontractor reach a mutual agreement." They emphasized, "Subcontractors, who tend to have weaker bargaining power, may find it difficult to actively request indexation agreements due to concerns about losing business partners. Therefore, it is necessary to create incentives for principal companies to voluntarily utilize the indexation system."

Currently, legislative amendments to include energy costs and other expenses in the scope of the supply price indexation system have been adopted as key presidential election pledges by major political parties. Jung Hanseong, Chair of the Fair Trade Promotion Committee, stated, "Expenses such as energy costs are essential cost-determining factors in manufacturing goods, so applying the indexation system to major expenses aligns with the original intent of the system." He added, "The committee will do its utmost to serve as a practical channel for incorporating field feedback and achieving institutional improvements."