Washington: The U.S. Trade Representative (USTR) released its annual report on foreign trade barriers, identifying several issues concerning South Korea's trade policies, including its "offset" defense trade policy, emission-related regulations on imported cars, and pharmaceutical pricing policies.
According to Yonhap News Agency, the 2025 National Trade Estimate Report was issued by the Office of the USTR just two days before the Trump administration's planned implementation of "reciprocal" tariffs. These tariffs aim to equalize the trade landscape by adjusting based on partners' tariff- and non-tariff barriers and other economic factors.
For the first time, the report called attention to South Korea's defense offset trade program, which mandates foreign defense contractors to fulfill specific conditions for industrial cooperation in government procurement projects. The report noted that should the value of a defense contract exceed $10 million, foreign contractors might face offset obligations.
South Korea's offset program, initiated in the early 1980s, requires conditions such as technology transfers and the purchase of Korean-made components before foreign contractors can supply defense goods. While other countries also have similar programs, the U.S. report highlighted concerns about these practices.
In the automotive sector, the USTR report emphasized the United States' concerns over Korea's emission-related regulations under the Clean Air Conservation Act, which impacts U.S. automakers' market access in Asia. The report underscored that enhancing access remains a "key priority" for the U.S.
The pharmaceutical and medical device industries in the U.S. have also expressed concerns over South Korea's lack of transparency in pricing and reimbursement policies, along with inadequate opportunities for stakeholder input on policy changes.
Recurring issues from previous reports were also noted, such as proposed legislation in South Korea that would require foreign content providers to pay network usage fees to local internet service providers. Additionally, efforts to regulate dominant digital service platforms for fair competition were mentioned, impacting large U.S. and Korean companies.
The report reiterated South Korea's import ban on American beef from cattle aged 30 months or older, labeling it a "transitional measure" that has persisted for sixteen years. This ban includes processed beef products like ground beef patties, beef jerky, and sausage.
The National Trade Estimate (NTE) is submitted annually to the president and Congress by March 31. Jamieson Greer commented on the administration's commitment to addressing these trade issues, emphasizing efforts to restore fairness for American businesses in the global market.