U.S. to Probe Anti-Import Drive in Korea

A U.S. official arrived Sunday to investigate whether the South Korean government is behind a controversial public campaign that has resulted in a sharp drop in imports of consumer items.

Wayne Berman, a counselor to Commerce Secretary Robert Mosbacher, will visit department stores to check the accuracy of news reports that high-priced foreign consumer goods have been removed from shelves and foreign brand-name boutiques closed.

Despite repeated denials by South Korean officials, U.S. and West European diplomats in Seoul say they believe the government is behind the anti-import campaign.

“We have evidence that Korean officials were involved,” said a U.S. Embassy official, who spoke on condition of anonymity. “It is unfortunate that such things can give ammunition to trade protectionists in the United States.”

The official said that although the volume of foreign consumer goods affected is small, the anti-import campaign is serious because “it is visible and can affect the future attitude of Korean consumers.”

Imports of consumer goods account for less than 5% of South Korean imports, which consist mainly of raw materials needed to produce goods for export, according to government figures.

The anti-import campaign began because of South Korea’s worsening trade balance. It had a deficit of $3 billion in the first quarter of this year and may have a full-year deficit for the first time since 1985.

The government and media blamed the deficit in part on rising imports of “luxury” foreign consumer goods, although the volume of such products is low.

The controversy erupted after some foreign consumer goods, such as golf clubs, brand-name clothes and refrigerators, suddenly disappeared from shelves of leading department stores in Seoul.

At Hyundai Department Store--owned by the giant Hyundai group, which exported 220,000 cars last year--about a dozen boutiques for such foreign brands as Burberrys, Bally, Lanvin and Yves Saint Laurent were closed.

“We did it for two reasons--low profits and new social obligations,” said Hyundai’s senior manager, Choi Chang-kon. “We also considered the mounting public sensitivity against a luxurious way of life.”

He denied that the action was ordered by the government, but said Hyundai was aware of the government’s repeated calls for austerity to cope with economic difficulties.

Lotte and other leading department stores in Seoul said they also plan to close boutiques or reduce space for foreign goods.

One of the products most affected is the U.S.-made Mercury Sable car, whose sales plummeted with the anti-import campaign.

The Sable, made by Ford Motor Corp., became the best-selling import soon after it was introduced in South Korea last October. In the last three months of the year, 998 Sables were sold, far more than all other imported cars combined.

But sales dropped to 105 in May from 280 in February, 224 in March and 159 in April. Kia Motors Co., the importer of the car, has lowered its sales projection for this year from 3,000 to 2,000.