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WTO allows Seoul tariffs in washers dispute

Feb 11,2019
The World Trade Organization (WTO) paved the way for Korea to impose retaliatory tariffs of up to $84.8 million a year on the United States - the latest twist in the two countries’ trade dispute over Korean washing machines.

The decision was released Friday in response to the Korean government’s January 2018 request to the WTO’s Dispute Settlement Body (DSB) to “suspend concessions or other obligations” that the United States had imposed on large residential washing machines made by Korean companies.

Its grounds were that the U.S. government had failed to comply with an earlier DSB decision in 2016 that ruled the U.S. tariffs on Korean washers were “inconsistent” with the WTO’s trade rules.

“Korea shall be entitled to impose suspension of concessions or other obligations in the amount of $74.4 million for the WTO-inconsistent anti-dumping duty measures and $10.41 million for the WTO-inconsistent countervailing duty measures during the first year following the date of DSB authorization,” read the arbitrator’s statement on the WTO’s official website.

The $84.4-million ruling is equivalent to only 12 percent of what the Korean government had asked for last year, $711 million. If the U.S. government continues to ignore the DSB’s recommendation and ruling, Korea is allowed to increase the level of suspension based on the precedent year’s inflation rate.

Based on the ruling, the Korean government will decide how many tariffs to impose on which U.S. products and report back to the WTO.

The two countries’ dispute over washing machines goes back to January 2013, when the U.S. government imposed a 9.29-percent antidumping tax and a 1.85-percent countervailing duty on Samsung Electronics products, and a 13.02-percent antidumping tax on LG Electronics machines.

Sparked by a petition from U.S. manufacturer Whirlpool, the move came at a time when the two companies were the biggest in the U.S. market in the washing machine sector with a combined market share of 36 percent, according to research firm The Stevenson Company. At the time, Whirlpool had a market share of around 15 percent.

A few months later, Korea’s government filed a complaint with the WTO saying that the U.S. calculation of tariffs on the washers went against some of the articles of the organization’s agreements on trade.

In 2016, the WTO concluded the case in favor of Korea. The U.S. government was asked to implement the WTO’s decisions within a 15-month period after the ruling, for which the due date was set at Dec. 26, 2017. However, the adjustments were not made and Korea filed another complaint with the WTO last January last year. The response came last Friday.

As for Samsung and LG, the decision will have a limited effect. The companies set up manufacturing lines in the United States last year. They remain the top washer sellers in the United States.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]