New Report Highlights U.S. Firms' Challenges with Korean Competition Enforcement

WASHINGTON, D.C. | Today, the National Bureau of Asian Research (NBR) released a report entitled “Understanding the Impact of KFTC Enforcement on U.S. Firms: Qualitative Evidence and Analysis.” Authored by NBR nonresident fellow Nigel Cory, the report finds that the competition policy enforcement activities of the Korea Fair Trade Commission (KFTC) “convey a pattern that firms widely perceived as protectionist” and are not in line with global best practices. These activities have been repeatedly raised by the U.S. government as a non-tariff barrier and a priority as part of ongoing trade talks with South Korea. Read the report.

Drawing on extensive confidential interviews with U.S. companies operating in South Korea, the report highlights concerns shared by the interviewed companies, including a “regulatory [environment] that U.S. firms view as unpredictable, politicized, and tilted against them,” with firms identifying pressures that “overlap with industrial policy objectives aimed at promoting Korean tech firms.”

Interviewed U.S. firms consistently described challenges around overly aggressive practices, the lack of due process, and the negative business impact of frequent, long investigations. Common complaints included the low threshold for opening investigations, limited provision of details and transparency, broad and arbitrary requests for information, aggressive investigative tactics and raids, and the regular use or threat of criminal referrals as an intimidation and enforcement tool.

While questions around competition policy and enforcement are increasingly central to trade talks between the United States and several partners, South Korea remains a global outlier. The report notes that “while the KFTC’s conduct may appear normal for South Korea, it is certainly not…when compared with other jurisdictions, particularly OECD members.”

“Our interviews highlight that U.S. firms face significant direct, indirect, and reputational costs from these KFTC investigations,” said Nigel Cory. “When these result from political or industrial policy pressures and don’t follow global best practices, these costs can amount to a significant non-tariff barrier that undermines a key bilateral economic partnership.”

Recognizing the significant bipartisan concern on Capitol Hill and in the Trump administration around this issue and nontariff barriers more broadly, NBR is engaged with U.S. and South Korean officials regarding the KFTC’s enforcement activities. As part of NBR’s mission to help decision-makers better understand Asia through independent analysis, NBR has briefed senior officials in the office of the U.S. Trade Representative, the Department of Justice, and the KFTC on the report’s findings.

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About NBR
The National Bureau of Asian Research (NBR) is an independent research institution based in Seattle and Washington, D.C. We bring world-class scholarship to bear on the evolving strategic environment in Asia through original, policy-relevant research, and we invest in our future by training the next generation of Asia specialists.

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