Martial Arts: "Korean-made Transformers Do Not Undermine US Security"

[Asia Economy Reporter Park Soyeon] The Korea International Trade Association announced on the 10th that it submitted an official opinion letter to the U.S. Department of Commerce on the 9th, requesting the exclusion of Korean-made transformers from the "Section 232 National Security Threat Investigation" initiated by the United States on imported transformers and parts.

The United States began a national security threat investigation on imported transformers and parts as of the 11th of last month. It cited Section 232 of the Trade Expansion Act, which allows for import restrictions or high tariffs if imports are deemed a threat to U.S. national security. Concerns arose as the import dependency on transformers and related parts reached 85% (based on 2010 data).

Recently, the sharp increase in transformer parts imports from Mexico and Canada also served as a background for this investigation. Previously, in March 2018, the U.S. imposed a 25% tariff on imported steel. It suspected that Mexico and Canada processed steel into transformer parts (processed electrical steel sheets) to circumvent this tariff and exported them to the U.S. In fact, Canada's exports of processed electrical steel sheets to the U.S. surged nearly tenfold from $35 million in 2016 to $310 million last year.

In its opinion letter, the Trade Association stated, "Considering that Korean transformer manufacturers are expanding investments within the U.S. while exports are declining, Korean transformers do not pose a risk to U.S. national security," and argued, "Even if Section 232 measures are implemented, Korea should be excluded from the target."

Exports of Korean transformers to the U.S. decreased from $294 million in 2016 to $154 million last year, due to the high anti-dumping tariffs imposed by the U.S. on domestic transformer companies.

In response, domestic companies are increasing their investments in the U.S. Hyundai Electric established a $200 million transformer production plant in Alabama in 2011 to increase production within the U.S. Hyosung acquired Mitsubishi's transformer plant in Tennessee for $47 million in December last year.

The Trade Association emphasized, "For stabilizing the power grid, a core infrastructure related to national security, it is important to procure transformers and parts from reliable suppliers," adding, "Korean transformers mostly use Korean-made parts, have passed the U.S.'s high-quality standards, and have built trust by reliably supplying the U.S. power authorities for over 40 years."

It further pointed out, "Implementing Section 232 measures that restrict imports of transformers and parts would rather hinder smooth power supply within the U.S. and increase electricity costs, thereby raising the burden on consumers."

Once the U.S. Department of Commerce initiates the Section 232 investigation, it will undergo a 270-day investigation period, report to the President, and then the President will make a decision.

The Trade Association added, "With the U.S. recently issuing executive orders restricting imports of power grid equipment from adversarial countries and strengthening national security measures, the situation cannot be taken lightly," and stated, "Korea will convey the message that it is a strong security and economic ally of the U.S."

This content was produced with the assistance of AI translation services.