South Korea Plans to Import More From U.S. : Moves to Blunt Growing Demands in Congress for Protectionist Legislation

Wary of possible U.S. protectionist moves, South Korea plans to limit its 1987 trade surplus with the United States to this year’s level of $7 billion by increasing American imports, South Korean government officials said Friday.

Officials at the Trade and Industry Ministry said the government believes the United States would probably retaliate if the bilateral South Korean trade surplus grows next year. They said the government fears more protectionist pressure in the U.S. Congress now that the Democrats control both houses.

They said the trade surplus with the United States, South Korea’s largest market, totaled $6.8 billion in the first 11 months of 1986 and is likely to exceed $7.2 billion for the year--up from last year’s $4.2 billion. Without government action, the surplus could top $10 billion next year, they said.

South Korean exports to the United States in 1987 are expected to total $15 billion, up 10% from this year, while the ministry plans to increase imports from the United States by as much as 30% to $8 billion.

The Korean government’s plans call for buying machinery, grains, coal and oil from the United States instead of elsewhere.

The officials also said the South Korean market will be opened to some agricultural products in response to U.S. demands, tariffs on certain U.S. products will be lowered and U.S. business investment in South Korea will be actively encouraged.

Access on Cigarettes

Earlier this year, in an effort to ease protectionist pressures building in the United States, South Korea allowed the import of U.S. cigarettes, opened the country’s insurance market to some U.S. companies and agreed to protect U.S. intellectual property rights. However, U.S. officials have demanded additional access to the South Korean market.

Until recently, Seoul officials maintained that South Korea deserved special consideration because it was still a developing country with huge foreign debts--now totaling $45 billion--and spent one-third of its national budget on defense.

However, paced by strong exports, particularly to the United States, South Korea’s overall trade surplus is projected to grow to $3 billion and its current account surplus to $4.5 billion this year, both unprecedented for South Korea.

Electronic items, textiles, footwear and cars have led South Korean exports to the U.S. market, which takes in about 36% of the country’s total exports.

The officials said the government has prepared a list of about 200 items that the United States could supply to South Korea at competitive prices.

South Korea bans imports of all foreign-made cars except those to be used for special purposes such as taxis for tourists, but officials said South Korea is committed to liberalizing car import policies.

Beginning next July, cars with engine displacements of 2,000 cubic centimeters would be allowed in, and cars with smaller engines would be permitted beginning in 1988, the officials said. (Cars sold by South Korea’s Hyundai in the United States have 1,500-cubic-centimeter engines.)

However, the officials said the government would continue to resist U.S. requests that the Koreans substantially appreciate their currency, the won, against the dollar.