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(EDITORIAL from Korea Times on Oct. 9)

2017/10/09 09:22

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Whirlpool won't wash

Samsung, LG should reconsider US investment plans

The U.S. International Trade Commission (ITC) ruled 4-0 in favor of Whirlpool on a case brought by the American washing machine producer against Samsung and LG Electronics for allegedly selling underpriced products.

The ruling should be reconsidered at a public hearing scheduled for Oct. 19 or, if not, needs to be discarded during the process that has until Dec. 4 to make remedial recommendations to President Donald Trump, who by early next year will make a final decision.

Or the two Korean firms should reconsider their investment decisions in the United States. Samsung is building a $380 million factory in South Carolina that will employ 950 people, while LG plans to invest $250 million by the first quarter of 2019 in Tennessee, in a plant that will employ more than 600. The combined total of the two firms' exports of large residential washers came to about $1 billion in 2016. Samsung accounted for 16 percent and LG for 13 percent in the U.S. washing machine market, while Whirlpool had 38 percent.

The arithmetic could not be clearer.

If Whirlpool's pursuit of "global safeguards" is accepted, it would lead to broader restrictions on imports such as heavier duties and quotas.

For three reasons, that should not happen.

First, it is about consumers' rights.

Samsung and LG as well as other international leaders dominate the global washer market, leaving Whirlpool and GE, now under China's Haier, struggling to rely on "patriotic" marketing and maintain their domestic U.S. market shares. Whirlpool and GE are not competitive so barring the Samsung and LG products is equal to forcing American consumers to use poor-quality products at higher prices.

Second, if the two Korean firms maintain their U.S. investment plans, would the U.S. protect Whirlpool? How? Would it slap extra duties on products made in the U.S. just because they carry the labels of the Korean firms? It simply does not wash.

Third, the ITC's latest decision comes after a similar decision on solar panels from China, Korea and Mexico. Trump advocates an America-first policy, but he also noted during his recent U.N. speech that it would be carried out in a "fair" manner to others. The way Trump behaves shows his sense of fairness is unilateral. If that is the case, the U.S. would not be different from a China that is bullying Korea and boycotting its products for political purposes.

Already, the U.S. is threatening to abolish its free trade agreement with Korea, claiming it is suffering from a trade deficit on an unfair calculation that excludes balance-tipping deficits Korea suffers in the services sector and military procurement. Any unfair conclusion on the washer dispute would likely disrupt the global trade rule and hurt the two countries' alliance. Besides, the ITC should remember the embarrassing case of 15 years ago -- the World Trade Organization's rejection of additional tariffs of up to 30 percent slapped on steel imports.