Baldrige Praises new South Korean Trade Policies

U.S. Commerce Secretary Malcolm Baldrige praised South Korea’s new surplus-cutting trade policies but warned of possible protectionist retaliation if Seoul’s market liberalisation efforts falter or fail.

In a press conference after talks with South Korean leaders, Baldrige called the government’s announced intention to regulate exports and boost imports “a very, very important step, the right direction for the Korean government to take.”

The government adopted the new policies last week in the hope of heading off a trade war with the U.S.

Baldrige said the policies “showed an understanding of the fact that this country cannot go on indefinitely growing by exports alone.”

“There has to be enough of a change so that domestic growth begins to take more of the load,” he said.

South Korea had a 7.2 billion dlr trade surplus with Washington in 1986, thanks largely to booming sales of cars and consumer electronic goods. It racked up another 1.4 billion dlrs in surplus in the first quarter of this year.

Baldrige said Seoul’s package of measures was “broad enough and comprehensive enough so that … Actions can be taken for liberalising imports (and) increasing the domestic economy, if the government is willing to follow through.”

“We will be watching the implementation of this new policy direction very closely,” he said. “Because of the protectionism growing in the U.S., We see a real problem if Korea does not keep on the same path … Of steadily increasing liberalisation…. If that should falter or fail or turn backward, I’m as sure as I’m standing here that we’d see protectionist movement in the U.S.”

Baldrige said he and South Korean Trade Minister Rha Woong-bae spent much time discussing trade problems in specific product categories.

These included service industries, which he said were still too much of a closed sector in South Korea, and computers and cars. Baldrige said he urged speedy action on removing the tariffs and taxes on imported U.S. Cars which can make them sell for up to three times their American prices.

“We want to stop that. With this sort of thing, there’s going to be trouble somewhere down the road,” he said. “We are just pointing this out.”

Asked if Seoul’s measures could succeed without a revaluation of the won, which Washington has been urging for months, Baldrige declined to comment. “We don’t have any target for any particular currency, but we do feel that currencies around the world, if we are going to be successful as a world economy, have to reflect the fundamentals of the various economies involved,” he said.

Baldrige said he had agreed to Rha’s proposal for cooperation on forming U.S.-South Korean joint ventures in third countries. The American government would be pleased to encourage U.S. Firms to get involved, he added.

Commenting on President Reagan’s decision to increase tariffs on certain Japanese imports to the U.S., Baldrige said Washington’s trade problems with Japan were not comparable to its difficulties with South Korea.

“I think the attitude in Korea is both reasonable and fair,” he said. “It’s a firm attitude. We don’t get anything for nothing or just by asking for it.

“But our negotiations are friendly and reasonable and they usually end up with something good happening at the end that both countries live up to.”