[Focus] Background of remarks by U.S. Trade Representative

A big wave is coming, but it is unlikely to strike right now.

This is the analysis worked out by many domestic trade experts of the remarks that Robert Zoellick, United States Trade Representative (USTR), made at the hearing of the U.S. Senate to ratify his designation.

Considering that the place Zoellick commented is the ratification hearing of the Senate, which is reflecting much of the opinions of its electorate, his remark was the one we expected earlier, said a researcher at the Korea Institute for Industrial Economics and Trade (KIET). At the same time, the issues Zoellick commented on -- steel products and the Korea Development Bank (KDB)¡¯s undertaking of corporate bonds floated by Hyundai Electronics Industries (HEI) -- were the ones the United States already has raised relevant issues with.

It goes without saying, however, that it is not a situation to remain at ease. As the domestic production of cold-rolled steel plates, a steel product necessary for the manufacture of automobiles, has reached 14 million tons, double the domestic demand of 7 million tons, Korea exports more than half of the output to foreign countries. Nevertheless, domestic steel producers have been engaging in stiff competition among them, rather than seeking ways to avoid foreign countries¡¯ trade restrictions through close cooperation. Under this situation, the domestic steel makers are feared to receive tough restrictions from foreign buyers in the immediate future.

Noting that Micron Technology of the United States has continued raising the issue on the KDB¡¯s undertaking of HEI, a head of the trade supporting team of the Korea International Trade Association said, ¡°It is unlikely to emerge as a trade dispute as it is clear that the government¡¯s step is not aimed at extending subsidies to an individual firm, Hyundai Electronics, and it is not easy for the U.S. side to prove damages suffered from the Seoul government¡¯s move.¡±

However, we found out the fact this time that the government¡¯s policies on restructuring or finance, which have been regarded as the its original rights, could become a trade issue with foreign countries. Accordingly, the government is expected to narrow the range of employing its policy tools.

As for the remarks by Zoellick, a trade expert here said, ¡°Zoellick commented the concrete trade-related problem, but it was a strong warning that possesses the general meaning that the Bush administration takes a stronger position than the Clinton administration in trade issues.¡±

A KIET researcher said, ¡°I have got an impression that the Bush administration has prepared for the inauguration of the New Round, which will deal with such issues as the service, intellectual property rights, and negotiations on agricultural products.¡±

If the New Round launches with such contents, Korea, which is weak in terms of international competitiveness in the intellectual and agricultural and fishery industries, is expected to be hit hard.

Lee Byong-Ki eye@donga.com