January 25, 2018 / 12:47 PM / in 7 months

South Korea hits back at U.S. tariffs with WTO challenge

GENEVA (Reuters) - South Korea has hit back rapidly at U.S. tariffs on washing machines and solar panels, filing challenges and demands for compensation at the World Trade Organization.

Delegates arrive at the World Trade Organization (WTO) headquarters in Geneva, Switzerland November 22, 2017. REUTERS/Denis Balibouse

The WTO published the South Korean complaints on Thursday two days after U.S. President Donald Trump signed the steep tariffs into law. He billed the move as a way to protect American jobs but the solar industry said it would lead to thousands of layoffs and raise consumer prices.

The 30 percent tariff on solar panels was among the first unilateral trade restrictions imposed by the Trump administration as part of a broader protectionist agenda aimed at helping U.S. manufacturers, but which has alarmed Asian trading partners that produce lower cost goods.

South Korea challenged the U.S. tariffs under the WTO’s Safeguard Agreement, leaving open the possibility of a full trade dispute later.

The agreement gives the United States 30 days to settle the matter, after which South Korea has a 60-day window to impose trade sanctions, if the U.S. measures break WTO rules. It was not clear if the United States could challenge that assumption.

Seoul is already seeking WTO trade sanctions to retaliate for Washington’s failure to comply with an earlier WTO ruling.

On Wednesday U.S. Commerce Secretary Wilbur Ross brushed off the threat of South Korea going to the WTO.

“The fact that they may get a favorable decision (at the WTO) doesn’t mean that it’s a correct decision,” he said. “But in any event there’s been no decision yet so it’s a little bit too early to assume that the safeguards will be knocked out.”

No country has ever negotiated a settlement under the WTO safeguard rules, and it was not clear if they could provide a quicker result than a full dispute, which could take three years or more, giving U.S. manufacturers a long period of protection from competition by their South Korean rivals.

Under WTO rules, a country can impose safeguards - temporary emergency tariffs - to shield its domestic industry from an sudden, unforeseen and damaging surge in imports.

Ricardo Meléndez-Ortiz, head of the International Center for Trade and Sustainable Development, said the solar tariffs would fail to boost U.S. solar manufacturing and would destroy U.S. jobs while impeding the fight against climate change.

“These tariffs are insufficient to really generate enough stimulus to create the manufacturing capacity that they are trying to stimulate,” he told Reuters.

“It’s just going to slow down the production of sustainable energy and solar in the U.S., in a big way.”

Reporting by Tom Miles; editing by Stephanie Nebehay and Mark Heinrich

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