"Vietnam and China-Entered Korean Companies Must Beware of 'US Antidumping Preliminary Determination' Risk"

[Asia Economy Reporter Jeong Hyunjin] Regarding the preliminary determination made by the U.S. Department of Commerce at the end of last year to impose countervailing duties on China and Vietnam due to currency undervaluation, concerns have been raised that Korean companies operating in these two countries may suffer disadvantages or be exposed to currency subsidy risks, urging caution.

The Korea International Trade Association's International Trade and Commerce Research Institute stated in its report titled 'Current Status and Issues of the U.S. Countervailing Duty Investigation on Currency Undervaluation,' released on the 1st, that in November last year, the U.S. Department of Commerce preliminarily determined that Vietnamese tires and Chinese twist ties received subsidies due to currency undervaluation caused by government actions, making them subject to countervailing duties. This is the first time in U.S. history that countervailing duties have been imposed based on exchange rates.

Countervailing duties are tariffs imposed to suppress unfair trade practices when imported goods gain price competitiveness due to subsidies or grants from exporting countries, causing damage to domestic industries. The U.S. Department of Commerce calculated the subsidy rates due to currency undervaluation as 1.16?1.69% for Vietnamese tires and 10.54% for Chinese twist ties. Including preferential financial policies, the total subsidy rates were estimated at 6.23?10.08% and 122.5%, respectively.

The KITA stated, "By revising the countervailing duty implementation rules in February last year to comprehensively include 'trading enterprises' under the specificity requirement, the risk of applying currency subsidy determinations has significantly increased," but also noted, "The Department of Commerce's investigative methodology has not yet been refined, and the rule revisions and preliminary determinations may violate existing U.S. laws and World Trade Organization (WTO) regulations, so disputes and controversies are expected to continue."

Kim Kyunghwa, senior researcher at KITA, said, "Korean companies with local operations in China and Vietnam, which the U.S. considers non-market economies, must be fully aware of and prepare for not only disadvantages arising from U.S. trade remedy investigations but also future currency subsidy risks," adding, "The possibility that the U.S. currency subsidy investigations will expand and be applied to various countries, including Korea, and a wide range of products cannot be completely ruled out."

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