South Korea’s recently elected president, Moon Jae-in, has arrived in the United States for an official visit. President Moon took office last month because his predecessor, Park Geun-hye, was impeached due to bribery and influence-peddling charges.
Moon and President Trump are discussing important international security issues such as North Korea and China, including the deployment of American Terminal High Altitude Area Defense anti-ballistic missile defense systems in South Korea.
They are also discussing the Park Administration’s apparent failure to follow the Korea-U.S. Free Trade Agreement and its ostensible abuse of administrative agency power to intentionally impair American companies. These trade and economic topics are important to both presidents.
They are important to President Trump, because during the 2016 campaign, he repeatedly expressed his willingness to renegotiate or even terminate/exit trade agreements under certain circumstances — when the other signatory countries weren’t living up to their commitments, or when the deals were just plain bad for the U.S. and U.S. workers. This past April, President Trump criticized KORUS. This year marks a review period to potentially renegotiate or ratify a new version of KORUS. In fact, in December 2011, Trump presciently chastised the Obama Administration’s ineffective renegotiation of KORUS.
These topics are important to President Moon because, politically, he needs to clearly distinguish and wall-off his administration from the misconduct of his predecessor’s administration. Moreover, in the past, President Moon has held himself out as a reformer of the chaebol (literally, “wealth clan”) system. A chaebol is a huge, dominant conglomerate, such as Samsung and Hyundai, which has close ties to — and enormous influence over — the South Korean government.
President Moon also holds himself out as a fighter of the corruption practically inherent in the corporatist chaebol system. For example, the leader of Samsung, Lee Jae-yong (also known as Jay Y. Lee), was arrested and indicted for bribery and other related charges. He and Samsung are caught up in the scandal which, in part, led to former president Park’s impeachment. Another example is Shin Dong-bin, the leader of Lotte, who also was arrested and indicted on charges of bribing former President Park.
President Moon and his senior staff surely understand how bad it would look if the South Korean government, under his leadership, were to continue misusing its administrative agencies to benefit South Korean companies and to harm American companies and their competitiveness.
For example, last year, South Korea’s Ministry of Health and Welfare issued pricing and reimbursement policies for medicines and medical devices without full transparency, and failed to comply with its KORUS obligation to make available an independent review mechanism. Moreover, it intentionally undervalued innovative medicines — specifically, those which U.S. pharmaceutical companies, not South Korean ones, were more likely to sell in South Korea.
Perhaps the best-known Park Administration misuse of its administrative agencies is the Korea Fair Trade Commission’s abuse of its antitrust investigation and financial penalty powers to target U.S. companies such as Qualcomm. The KFTC is roughly equivalent to our U.S. Federal Trade Commission’s Bureau of Competition.
KORUS mandates due process provisions and procedural safeguards, such as guaranteeing parties the right to cross-examine witnesses and review all documents on which charges may be based. The KFTC, however, purportedly failed to provide these basic procedural protections to American businesses. It also engaged in behavior such as witness intimidation, withholding evidence (including exculpatory evidence) and withholding access to witnesses – all to the benefit of chaebol like Samsung.
Because President Moon once served as a human rights lawyer, he knows a lot about the toxicity of administrative abuse. He has a unique opportunity to show the world that his administration, in sharp contrast to the Park Administration, will no longer tolerate the misuse of government authority to the detriment of foreign companies, and in fact no longer views non-tariff protectionism as good for the South Korean economy, instead recognizing that both exports and imports are beneficial.
John Shu is an attorney in Newport Beach, CA with extensive experience in litigation, constitutional and antitrust law. He served under Presidents George H.W. Bush and George W. Bush.
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