WTO Says South Korea Imposed Illegal Tariffs on Japanese Steel

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The World Trade Organization said South Korea violated international trade rules when it renewed a series of tariffs on Japanese stainless steel bars, according to a decision posted on the WTO’s website Monday.

The WTO dispute settlement panel largely backed Japan’s complaint that South Korea violated the WTO anti-dumping agreement when it renewed a series of 15.39% duties on Japanese steel bar imports back in 2017.

The panel said South Korea failed to provide sufficient evidence to justify the continuance of the duties and called on Seoul to comply with its international trade obligations. Specifically, the WTO said South Korean authorities failed show that if the tariffs were to expire, the subsequent drop in Japanese prices would increase Japanese exports and harm Korea’s domestic industry.

Japanese exports of stainless steel bars to Korea exceeded $20 million in 2019 but the Korean government says that the value of goods targeted by its tariffs is only about $4 million.

Though the value of the dispute is relatively small, Monday’s ruling may further inflame a simmering trade fight between Japan and Korea that dates back generations.

That’s because South Korea plans to appeal the ruling, which would effectively veto Monday’s decision and deny tariff relief to Japanese steel producers such as Nippon Steel Corp., JFE Holdings Inc. and Kobe Steel Ltd.

The WTO appellate body has been dysfunctional since December 2019, when the U.S. blocked the appointment of new members of the seven-member panel. As a result, all new appellate cases enter into a legal limbo because the committee lacks a quorum needed to issue a final judgment.

©2020 Bloomberg L.P.

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