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Korea Herald
21-03-2025
- Business
- Korea Herald
US industry group calls on USTR to urge S. Korea retract online platform regulation proposals
An American industry group has asked the United States Trade Representative to urge South Korea to withdraw its digital platform regulatory proposals, stressing they pose an "unnecessary irritant" to the two countries' relationship and could breach a bilateral free trade agreement. The Coalition of Services Industries submitted the comments to the USTR last week to assist in the review and identification of "unfair trade practices and harm from non-reciprocal trade arrangements." The USTR is likely to examine the case for its calculation of "reciprocal" tariffs for Korea set to be rolled out on April 2. In late 2023, the Korea Fair Trade Commission proposed enacting an act aimed at tightening oversight over market-dominant online platform businesses to ensure fair competition. After pushback from US stakeholders and others, it announced a new proposal in September to revise the country's existing key anti-trust law instead of seeking new legislation. "Concerningly, the new proposal still retains problematic elements from the ex-ante proposal, such as disproportionately targeting US companies and narrowly focusing on online services that US firms provide in Korea," the coalition said. It pointed out that other bills for digital platform regulation are also under consideration at South Korea's National Assembly. "Korea's pursuit of discriminatory legislation against US firms is an unnecessary irritant to the longstanding bilateral relationship and a potential KORUS violation that creates an unlevel playing field for US firms competing against rapidly growing Chinese e-commerce companies," it said. KORUS is short for the South Korea-US free trade agreement. "CSI asks USTR to urge the Korean government to withdraw both ex-ante and ex-post proposals that would significantly disadvantage US firms," it said. During a confirmation hearing in February, then USTR nominee Jamieson Greer warned South Korea and other countries against taking regulatory measures that would negatively affect American online technology firms, saying that "it won't be tolerated." The coalition lashed out at the KFTC, accusing it of unfairly treating US firms. "The KFTC continues to unfairly target US companies with unprecedented fines, office raids, threats of prosecution, and attempts to harass American companies with criminal allegations and erroneous investigations," it said. "This enforcement culture in Korea is a troubling anomaly for a closely allied US trading partner and could represent 'unfair or harmful acts, policies, or practices' that present a 'structural impediment to fair competition' per the Trump administration's recent Reciprocal Trade Memo." It was referring to the presidential memorandum that President Donald Trump signed last month to devise a comprehensive plan to customize "reciprocal" tariffs based on trading partners' duties, non-tariff barriers, exchange rate policies and other elements. The coalition also took issue with South Korea's telecommunications business act, which it depicted as a legal basis for allowing Korean telecommunications providers to charge online platforms for utilizing the online network. It particularly pointed to provisions, such as a regulatory requirement to designate a domestic representative, which it said "not only add unnecessary friction to trade, but also have potential implications for taxation and are inconsistent with Korea's obligations under the Korea-US FTA." It went on to underscore additional regulatory proposals in South Korea that require content and application providers to enter into a network use agreement with Korean internet service providers, or additionally mandate CAPs to pay "network usage fees" to Korean ISPs under the agreement. "Failure to comply would result in the issuance of a correction order or a penalty surcharge," it said. "These proposals would restrict the ability of US content and applications service providers to access the Korean telecommunications network on reasonable and nondiscriminatory terms and conditions, calling into question Korea's adherence to its KORUS commitments." Moreover, the coalition highlighted South Korea's restrictions on the export of location-based data, which it claimed have led to a competitive disadvantage for international suppliers seeking to incorporate such data into services offered from outside of Korea. "Foreign-based suppliers of interactive services incorporating location-based functions, such as traffic updates and navigation directions, cannot fully compete against their Korean rivals because locally based competitors typically are not dependent on foreign data processing centers and do not need to export location-based data," it said. "Korea is the only significant market in the world that maintains such restrictions on the export of location-based data." It noted that exporting geospatial data requires a license in Korea, arguing that Seoul has never approved a license to export cartographic or other location-based data, despite numerous applications by foreign suppliers. "US stakeholders have reported that Korean officials, citing security concerns, are linking such approval to a separate issue: a requirement to blur certain integrated satellite imagery of Korea, which is readily viewable on other global mapping sites based outside of Korea," it said. "Korean officials have expressed an interest in limiting the global availability of high-resolution commercial satellite imagery of Korea but have no ready means of enforcing such a policy since most imagery is produced and distributed from outside of Korea." The comments came as the Trump administration plans to impose country-by-country reciprocal tariffs that will be customized based on US trading partners' tariff- and non-tariff barriers, and other factors, such as exchange rates and unfair trade practices. (Yonhap)
![[Robert D. Atkinson] Korea's digital gamble: Will new tech rules hurt innovation and help China?](/_next/image?url=https%3A%2F%2Fwimg.heraldcorp.com%2Fnews%2Fcms%2F2025%2F03%2F04%2Fnews-p.v1.20250304.7b74ffa30eea40e9b2e9b3239305c40c_T1.jpg&w=3840&q=100)
Korea Herald
04-03-2025
- Business
- Korea Herald
[Robert D. Atkinson] Korea's digital gamble: Will new tech rules hurt innovation and help China?
South Korea is on the verge of making a costly mistake by copying Europe's misguided digital competition regulations. The Korean government's proposed competition rules for major internet platforms misunderstand how digital markets function and would actually hurt Korean consumers' online experience. Even worse, by unfairly penalizing large American technology companies, these policies risk provoking President Trump, who is already looking for excuses to slap tariffs on adversaries and allies alike. Korea should think twice before giving Trump a reason to retaliate and escalate tensions. Parliament's Platform Competition Promotion Act (PCPA), modeled after the EU's Digital Markets Act (DMA), would place strict rules on platforms like social media sites, search engines, and online marketplaces. Separately, Korea's Fair Trade Commission (KFTC) is considering changes to its competition rules along similar lines. These 'reforms' would, among other things, restrict how platforms rank search results, display products, and integrate services. Rather than making markets more competitive, Europe's new tech rules have created unexpected problems. While Europe's DMA is still new, early results suggest that it has harmed users, slowed economic growth, and made it harder for startups to expand, leading many to move their businesses elsewhere. For example, Google had to remove some search features in Europe, forcing users to visit multiple websites to find information that used to be easily accessible in one place. Additionally, Apple was forced to allow third-party app stores, creating security risks and confusion for users. Europe's struggles with the DMA should be a lesson for Korea. For example, if Kakao is forced to allow rival payment services within KakaoPay, the seamless integration between chat, shopping, and payments could be disrupted -- making it harder for users to complete transactions. What's more , if Korea bans common business practices like promoting a company's own products or bundling services together, digital services could become pricier and less user-friendly. Indeed, many small Korean brands and retailers depend on platforms like Coupang or Naver Shopping to reach customers. If e-commerce sites are forced to prioritize competitors in search results, smaller businesses will have a harder time standing out. While the PCPA and KFTC's adjustments would burden US and Korean firms, Chinese firms would largely escape scrutiny. Why? Because China's tech companies fly under the radar in Korea as the regulations target platforms that meet certain market thresholds, often linked to Korean revenue or user numbers. By contrast, US companies like Google and Apple, as well as domestic leaders like Naver and Coupang, are likely to cross these thresholds and be subject to the new restrictions. While Korean and US companies would struggle with compliance and increased restrictions on their business practices, Chinese firms will expand in Korea, strengthening their foothold in AI, cloud computing, and e-commerce. For example, Chinese e-commerce giants like Alibaba and Pinduoduo have been aggressively entering overseas markets, including Korea. By leveraging lower costs and government-backed subsidies, these firms could capture a larger share of Korea's online retail market -- putting pressure on domestic companies like Coupang and Naver. Additionally, China's dominance in AI-driven recommendation algorithms could give its platforms an unfair advantage if Korean firms are restricted in how they personalize search results and shopping experiences. Finally, this isn't just a techno-economic issue, it's a diplomatic one. Make no mistake, the very prospect of these regulations is already putting strain on US-Korea trade relations. US Congresswoman Carol Miller (R-WV) introduced the US-Republic of Korea Digital Trade Enforcement Act, which calls for greater scrutiny of Korea's trade policies and potential retaliation if American firms face such discriminatory rules. And if Korea continues to consider this approach, it will likely be seen as a red flag for the new Trump admin, with US Trade Representative nominee Jamison Greer already signaling things could escalate things even further. In fact, the second Trump term is likely to be quite different than the first. Trump has already expressed his frustration both with allies like Korea and adversaries over what he perceives a system rigged against America. The fact that the United States runs a trillion-dollar trade deficit with the world is something the President thinks about every day. And he has already said that he is tariff man and will apply tariffs to resolve these problems. Adding insult to injury by copying the EU (likely Trump's next big target for tariffs) and applying laws that target US technology leaders is likely to just 'poke the bear.' Korea would be well advised to do otherwise. It's time for Korean policymakers to take a strategic pause. There is no crisis; in fact, there is nothing that current Korean competition law cannot adequately address. Watching how these laws unfold elsewhere would allow Korean policymakers to craft a smarter approach that protects innovation, competition, and national security. But more importantly, now is not the time for Korea to be seen as passing unfair regulation that lets President Trump say that Korea is 'taking advantage of America.' Robert D. Atkinson is president of the Information Technology and Innovation Foundation. Lilla Nóra Kiss contributed to this article. The views expressed here are the writer's own. -- Ed.
