March 15, 2019 / 3:27 PM / 4 months ago

U.S. requests consultations with South Korea under trade deal

FILE PHOTO: The South Korean and American flags fly next to each other at Yongin, South Korea, August 23, 2016. Courtesy Ken Scar/U.S. Army/Handout via REUTERS

WASHINGTON (Reuters) - The Trump administration has requested consultations with South Korea under the two nations’ free trade pact to try to resolve U.S. concerns about procedures in competition hearings held by a South Korean trade commission.

“Some of these hearings have denied U.S. parties certain rights, including the opportunity to review and rebut the evidence against them,” the Office of the U.S. Trade Representative said in a statement. “Denial of this fundamental right undermines their ability to defend themselves.”

The Korea Fair Trade Commission (KFTC) in December 2016 fined U.S. mobile chipmaker Qualcomm Inc over $900 million for what it called unfair business practices in patent licensing and modem chip sales. The company has contested the ruling.

A USTR official said a number of U.S. information technology and other companies have been affected by KFTC competition hearings in recent years.

The United States and South Korea last year renegotiated some aspects of the U.S.-South Korea Free Trade Agreement (KORUS) to address U.S. complaints about the trade deal that was first implemented in 2012. But these changes were largely focused on the automotive sector to protect the U.S. truck market and provide U.S. automakers greater access to the South Korean market.

The USTR official said that South Korea had been working through a process to amend its competition laws before the KORUS negotiations started. Once it became clear late last year that the draft amendments, sent to South Korea’s National Assembly in December, did not address U.S. concerns, USTR decided to proceed with the consultations request.

USTR said it was requesting consultations at this time because recently drafted amendments to Korea’s “Monopoly Regulations and Fair Trade Act” fail to address Washington’s concerns that CFTC hearings continue to deny U.S. companies due process rights under the KORUS agreement.

Reporting by Tim Ahmann and David Lawder; Editing by David Gregorio and James Dalgleish

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