South Korea to file complaint to WTO over U.S. safeguard measures

SEOUL, South Korea, Jan. 23 (UPI) -- Seoul plans to file a complaint to the World Trade Organization against the United States' safeguard measures on South Korean washing machines and solar panels.

This come after U.S. president Donald Trump slapped heavy duties on imported washing machines and solar cells, under the International Trade Commission's recommendations made last month.

Under the safeguard measure on washing machines, a 20 percent tariff will be imposed on the first 1.2 million imported large residential washers in the first year, and a 50 percent tariff on additional machines. The rates will decline to 16 percent and 40 percent in respectively in the third year.

The measures ignored the ITC's recommendation to exclude washers from LG Electronics while it exceeded the rate of tariffs proposed by the commission.

South Korea's Trade Minister Kim Hyun-chong on Tuesday called the measures "excessive" and "regrettable," saying they may constitute a violation of WTO rules.

He said Seoul plans to take the case to the WTO's dispute settlement meeting next month "to actively counter protectionist trade practices to defend national interests."

The U.S. trade action is bound to hurt South Korean electronic giants Samsung and LG Electronics. The two companies together sell more than 2.5 million washing machines annually in the U.S. market.

U.S. home appliance maker Whirlpool has been pushing for safeguard measures against Samsung and LG, claiming that "cheap" imported washers hurt domestic companies.

Samsung, which recently began operating a new washer plant in South Carolina, voiced concern that the trade restrictions would affect U.S. customers.

"This tariff is a tax on every consumer who wants to buy a washing machine. Everyone will pay more, with fewer choices," Samsung said in a statement.

LG Electronics strongly criticized the safeguard measures, saying it would only threaten American jobs at its new plant under construction in Tennessee.

South Korean solar panel makers are expected to take a bigger hit.

While washing machines make up a small portion of the tech giants' exports, the volume of solar panel shipments to the U.S. market are expected to fall by 10 to 30 percent.

Local companies exported $1.3 billion worth of solar cells and batteries to the U.S. last year, accounting for 15.6 percent of its imported solar panel market, Yonhap reported.

Under Trump's safeguard action, a 30 percent tariff will be placed on imported solar cells and modules in the first year, with the tariffs falling to 15 percent by the fourth year. 2.5 gigawatts of unassembled solar cells can be imported tariff-free.

South Korea's largest solar cell maker Hanhwa Q CELLS said, "We will aim to maintain our volume of exports to the U.S. market while expanding sales in Europe, Japan and Australia."

The Korea International Trade Association on Tuesday warned that the U.S. may impose additional safeguard measures in other industries.

The institute recommended that South Korean businesses diversify their export markets and that the government lodge a petition to the WTO, as countries enforcing safeguards are required to provide an opportunity for negotiation with the targeted export nation.