Potential Economic Losses from South Korea’s Policies
A recent study indicates that South Korea’s trade and regulatory policies may cost the U.S. economy upwards of $500 billion over the next decade. The Competere Foundation conducted this research, asserting that if South Korea continues to enforce restrictions on American high-tech firms, the economic damage could reach around $525 billion.
Critics point out that these measures, driven by the Korea Fair Trade Commission (KFTC) and the administration of President Lee Jae-myung, tend to benefit South Korean and Chinese businesses. As a result, U.S. companies may face unfair competition. “The government’s digital and competition policies are projected to lead to a combined economic loss of about $1 trillion for both the U.S. and South Korea,” stated Shankar Singham, chairman of the Competere Foundation, adding that this translates to a loss of roughly $3,800 for each American household.
Singham emphasized that this loss isn’t inevitable; it could be mitigated if South Korea were to abandon these detrimental policies and foster a fair competitive environment for all businesses.
Experts observe that South Korea tends to favor regulatory measures and non-tariff barriers over direct import taxes to support its local industries against foreign competition. Recent proposed laws, such as the Online Securities Exchange Integrity Act and the Online Platform Monopoly Act, impose stringent compliance requirements that could ultimately raise costs for U.S. consumers, according to the same report.
These regulatory frameworks seem inspired by the European Union’s digital market law, introduced in 2022. Although that law was intended to tackle monopolistic practices, critics—including some from the Trump administration—argue that it primarily serves to generate profits at the expense of American firms. U.S. lawmakers have voiced concerns that adopting similar approaches in South Korea could lead to comparable economic losses and limit opportunities for American tech companies.
“What we’re seeing from South Korea is a direct fallout of the current administration’s lack of robust leadership in tackling these rising digital trade barriers,” noted Ohio Representative Max Miller in a conversation with the Daily Caller News Foundation.
In July, President Trump announced a new trade framework with South Korea, which included a commitment of $350 billion in investments from the South Korean government. While the specifics are still being ironed out, there’s hope that this agreement might open doors to discussions around dismantling some of these regulatory hurdles.
Miller and more than 40 fellow House Republicans have reached out to key figures in the Biden administration, urging them to collaborate with South Korean counterparts to prevent adverse effects arising from these proposals. They argue that such regulations don’t just harm U.S. firms but also unwittingly advance the interests of the Chinese Communist Party (CCP) by favoring Chinese tech giants like ByteDance and Alibaba.
If these companies can operate without the regulatory burdens faced by U.S. counterparts, lawmakers are concerned about increased risks related to data security and other issues stemming from the CCP’s influence.
