On Korea: Academic Paper Series 2010

An old Korean proverb says that when two whales fight it is the shrimps whose backs are crushed. Maybe that proverb best describes Korea’s situation on the trade front these days. The United States and China are engaged in trade disputes on many issues. All countries are holding their breath as they watch the surge of trade friction between the United States and China in various forums. Some of the disputes are pending at the World Trade Organization (WTO) while others are addressed bilaterally through respective domestic proceedings. Any challenge or measure by Washington against a Chinese product has been readily greeted by a comparable challenge or measure by Beijing against another U.S. product. Beijing’s confidence was further evidenced when it recently poked one of the sorest spots of the United States: it just initiated a countervailing duty (that is, an anti-subsidy) investigation against the U.S. bailout of the automobile industry, arguably thus far an almost taboo issue in the global trade community. In sum, the traditional scene of U.S. unilateral complaints against and bashing of China is now apparently changing.