Korea Needs Trade Surplus To Pay Debt

South Korea will dismantle its barriers to foreign goods as soon it substantially pays off its $44.5 billion foreign debt in another three to five years, Trade Minister Rha Woong Bae says.

Asked if barriers to foreign goods would be lowered once the foreign debt was reduced, Rha said in an interview: “Yes, I think so.”

But for now the trade surplus is vital if the nation is to accumulate enough foreign exchange reserves in order to reduce that international debt, Rha said.

He said that last year was the first time South Korea registered an overall trade surplus--$4.5 billion, against a 1985 deficit of $900 million.

Rha spoke at the end of a two-week trade mission here during Korean businessmen agreed to buy U.S. products valued at $1.8 billion. Much of the purchases are in goods that South Korea previously bought from Japan.

He said the American purchases were to reduce his country’s $7.1 billion trade surplus with the U.S. and also to cut its $5.6 billion deficit in trade with Japan.

Rha said the purchases were also motivated by a shift in exchange rates between the dollar and the yen that made it cheaper to buy U.S. goods than Japanese products.

He said South Korea was heavily dependent on foreign trade and he hoped that leaders of the world’s major trading nations could find a solution to the growing trend toward protectionism.

The U.S. Congress is currently considering several bills to shut U.S. markets to some foreign goods in an effort to help cut the record American trade deficit, which reached $170 billion in 1986.

“I hope the leaders can get together to find a solution by making some mutually satisfactory concessions,” Rha said.

Speaking of his own country, he said: “We have made a lot of concessions already.”

Rha cited regulations permitting foreign investment in industrial firms, increased foreign banking activity, and a crack-down on piracy of intellectual property by strengthening protection of copyrights and patents.

Rha said South Korea had also lowered many of its tariffs.