Category: Korea-Business

The US and South Korea have had a continuous back and forth fight over the status of US beef in Korea.  The Koreans are looking for anything to ban US beef in order to protect their own domestic beef industry at the expense of South Korean consumers who pay some of the world’s highest prices for beef products.

Earlier this month the fight over US beef continued when South Korea banned US beef again because in a massive shipment of US beef the inspectors found four boxes of beef that were produced for the US market not the Korean market because they contained bone fragments which are forbidden by the South Korean government.  The latest ban was enough that it got Congress moving on this beef fight with threats of bringing the issue up to the World Trade Organization.  These threats got the South Koreans to drop their ban, but for how long is anyone’s guess at this point.

However, what is interesting is that details are now beginning to emerge of how the four boxes found themselves inside the container with the rest of the US beef designated for export to South Korea.   Read the whole article but here is (pardon the pun) the meat of the article:

Four boxes of beef, weighing about 287 pounds, were mistakenly sent to South Korea as samples on June 2, although they were meant for domestic consumption, said Kim Do-soon, an official with South Korea’s Agriculture and Forestry Ministry.

The U.S. Agriculture Department informed Seoul of the latest mistaken shipment, Kim said.

Two U.S. meat plants, run by Tyson Foods Inc., processed the beef and have been suspended from handling meat bound for South Korea, the official said.

A spokesman for Springdale, Ark.-based Tyson, Gary Mickelson, said that, “contrary to South Korean news reports, Tyson Foods did not ship the beef in question.”

“We produced it for domestic sale and consumption,” he said Tuesday. “The product was sold by Tyson Foods to a Minnesota company, which resold the product to Iowa-based Midamar Corp.

“Midamar mistakenly exported the beef to South Korea several weeks ago without our knowledge, involvement or permission,” he said. “We’re once again working through USDA in hopes of quickly resolving this problem.”

Mickelson would not say which two plants were involved. The company has several facilities in Nebraska.

A spokesman for Midamar Corp. of Cedar Rapids, Iowa, said his company did not send the four boxes to South Korea.

Darrin O’Brien, who works in export sales for Midamar, said they were sent to a South Korean company in California, which he said he would not identify. He also said he didn’t know what that company had done with the samples.

Does anyone else find it interesting that the four boxes found in the US beef shipment to Korea were actually sent to a South Korean company in California and then magically some how appeared in the US container in South Korea?

Things that make you go hmmmm…….

The first ever export of rice from Korea to the US has been announced:

A shipment of South Korean rice was headed to the United States on Tuesday, marking the first time that the country has exported its staple food amid efforts to protect the rice market from foreign imports.

The 2-ton shipment, set to be airlifted later Tuesday, is part of 52.5 tons of rice that a Korean-American businessman in Los Angeles, Warren Jung, is importing, said Song Mi-ryong, an official of the North Jeolla provincial government in the country’s southwest.

Koreans living in Los Angeles were expected to be the main consumers of the Korean rice, Song said.

The 136 million won (US$146,000; �109,000) deal marks South Korea’s first rice export.

Song said the importer, Jung, agreed to buy an additional 1,050 tons and is scheduled to sign a US$2.73 million (�2.04 million) contract Wednesday.

The export to “the U.S., a major rice producing nation, represents evidence that U.S. consumers recognized the quality of North Jeolla province rice,” said Kim Wan-joo, governor of the province.

Actually no Mr. Governor because like the article states Korean-Americans are the ones expected to buy the rice, not the general American public.  Additionally what I find interesting is that the US is allowing South Korea to export their rice to America and yet the US cannot export rice to South Korea.

After the latest ban on US beef imports into Korea was announced this week Senator Ben Nelson had some strong things to say about South Korea:

“Of course, shipments intended for domestic use shouldn’t have been sent to Korea, and there was a mess-up in the U.S. Department of Agriculture that contributed to this mistake,” said Nelson, D-Neb., on Wednesday.

But Nelson categorized the shipments as a procedural problem, not a safety concern.

“Instead of just dealing with the one thing … nope, they shut it all down,” Nelson said. “They take every opportunity to shut off our beef, then they want a free Korean trade agreement.”

“It’s clear that the reaction by the South Korean government was far out of line with the problem. It indicates to me that they were probably looking for an excuse to stop imports,” Nelson said.

You don’t say. 

The Korean government will just continue to play this game as long as there are no consequences for it.  Everyone remember the Great Kimchi Crisis of 2005 between Korea and China?  During the crisis the Korean government tried to stop Chinese kimchi imports because they supposedly were tainted with lead.  The Chinese quickly responded by denying certain Korean imports in kind and suddenly the Great Kimchi Crisis was solved. 

This is the same kind of action that needs to be taken in regards to US beef.  Senator Nelson appears to finally be getting the US government moving in that direction:

Nelson said he planned to send a letter to Senate Finance Committee Chairman Max Baucus, D-Mont., asking him to withhold any committee action on a free trade agreement with South Korea until that country resumes American beef imports.

He also will be asking the U.S. trade representative to proceed against South Korea in the World Trade Organization for “their unfair treatment of U.S. beef.”

How about turning around the first ship full of Samsung Electronics products and see what happens?

The Chosun is not happy that members of the US Congress are trying to begin renegotiations of the recently signed Free Trade Agreement between Korea and America:

Two U.S. Congressmen — Charles Rangel, chairman of the House Ways and Means Committee, and Sander Levin, chairman of the trade subcommittee — have written to the U.S. Trade Representative (USTR) to call for renegotiations of the U.S. free trade agreement with Korea. The letter urges new talks with Korea on systematic barriers in automobiles, industrial products, agricultural and service markets.

This is the second time the U.S. has raised objections to the Korea-U.S. FTA, following a call for renegotiations on the environment and labor. These requests for renegotiations go against the general principles of negotiations and international norms.

Here is my favorite paragraph from the article:

The existing Korea-U.S. FTA was reached only after both sides took strenuous pains to find a balance between each other’s interests. Trying to unilaterally redesign the agreement to their advantage is tantamount to attempting to break the backbone of the trade pact. And the moment the U.S. shifts the burden of fresh negotiations onto Korea’s shoulders, the deal will go to pieces.

What I like about this paragraph is that it is quite ironic if you substitute Korea-US FTA in the paragraph with the US-ROK cost sharing agreement.  The US-ROK coast sharing agreement was reached late last year after long negotiations only to be unilaterally changed by the Korean government (see here & here) when they saw an opportunity to do so to their advantage when former Secretary of Defense Donald Rumsfeld was forced to resign. 

The FTA will not be renegotiated.  The two Congressmen in question are trying to score domestic political points with their constituencies in the US over the FTA, especially Senator Levin since he is from Michigan the home of the American auto industry.  They have to give an appearance of going down fighting against the Korea-US FTA in order to secure votes at home. 

With all this said I find it more than little ironic that the leading South Korean newspaper, the Chosun Ilbo is complaining about a couple of Democrat Congressmen playing domestic politics over the FTA and yet says nothing when the Korean government pulled one of the biggest back stabbings of the US in the history of the US-ROK alliance last December. 

Japanese motor companies overtook the United States in car sales last year:

Japan has regained its position as the world’s largest car producer after 13 years. China ranks third following the United States and outdistancing Germany. According to statistics for 2006 published by the Organisation Internationale des Constructeurs d’Automobiles on Monday, Japan overtook the U.S. by producing 11.48 million cars, up 6.3 percent from 2005 (10.8 million cars). Japan was the world’s top car-producing country from 1980 to 1993 but fell to second in 1994.

The U.S. slipped to second for the first time since 1994, producing 11.26 million vehicles. U.S. production decreased 5.7 percent from 2005 (11.95 million cars), registering a decrease for the fourth consecutive year. China produced 7.19 million cars in 2006, overtaking Germany, which manufactured 5.82 million cars, and becoming the world’s third-ranking car-producing nation. China’s production showed a sharp increase of 25.9% from 2005 (5.71 million cars). South Korea ranked fifth, producing 3.94 million cars, up 4.3 percent from 2005. France, the sixth-ranked country, made 3.17 million cars, down 10.7 percent from the previous year and lagging far behind South Korea.

Hopefully this will be a wake up call to the US automobile industry which appears to be poised to be by passed by China in coming years as well.  What is interesting is that China manufacturing abilities are being aided through industrial espionage being committed in Korea:

State prosecutors yesterday charged nine former and incumbent employees of Kia Motors Corp., the nation’s second-largest automaker, for leaking core manufacturing technologies to China.

The illegal transfer would cause trillions of won in loss to the domestic car industry, the Suwon District Prosecutors’ Office said.

Five of them were arrested and indicted in the first industrial espionage case involving the automotive industry in Korea. Four others were charged without detention.

They are suspected of colluding to leak confidential data on nine separate occasions from Kia to a Chinese company since November. They received a total of 230 million won ($248,620) in exchange for the data, the prosecution said.

It seems like everything is made in China now a days so why not our cars as well seems to be the trend.

With the threat of the cancellation of free trade talks hovering over the negotiators, each side was finally able to agree on an FTA that some are calling an FTA-lite.  Even as an FTA-lite, it is still the world’s largest bi-lateral Free Trade Agreement.  The Korea Times has a pretty good graphical run down of the FTA:

Notice in the agricultural sector the rice market was not opened so Korean consumers will continue to pay some of the world’s highest prices for rice.  The beef sector is supposed to be gradually opened over 15 years, but I wouldn’t be surprised if the Korean government keeps playing the mad cow disease game with US beef.  American fruits and vegetables are going to be allowed into Korea which should reduce prices for Korean consumers a bit on those products.  The Korean automobile and textile industries are going to greatly benefit this agreement.  The Korean steel sector is also going to greatly benefit. 

All in all to the casual observer like myself it appears the Koreans are getting more out of this agreement than the US with their manufacturing sectors receiving a big boost while Korean consumers will find lower prices in their supermarkets with US products.  However, I expect the usual suspects to claim that Korea is being economically colonized by the US and all the other usual nonsense that comes from the anti-US lobby in Korea.  . 

You would think the government would have more pressing things to work on then drafting robot ethics legislation:

South Korea is drafting an ethical charter to govern how robots will function alongside humans, officials said Wednesday.  The Ministry of Commerce, Industry and Energy said the government plans to issue a "Robot Ethics Charter" for manufacturers and users to cover the ethical standards that must be programmed into the machines.

"The government plans to set ethical guidelines concerning the roles and functions of robots as robots are expected to develop strong intelligence in the near future," the ministry said in a statement.

So what is driving this?  Well, I think Korean Information and Communications Minister, Park Hye-young, has the answer:

"Imagine if some people treat androids as if the machines were their wives. Others may get addicted to interacting with them just as many internet users get hooked to the cyberworld," she said.

I can imagine what kind of addictive interacting with them Ms. Park is talking about when I read "shocking" stories like this.

I posed the question earlier if the XK2 tank was next generation defense or a potential money maker? Well the answer to this question is emerging:

Turkey is considering purchasing South Korea’s new amphibious main battle tank unveiled last week for its next-generation tank procurement project, a military source said yesterday.

However, the Korean Main Battle Tank called XK2 is not the only option on the market. The French Army’s Leclerc is also a consideration, the source said on condition of anonymity.

“Chances are very high that South Korea could win the bid because Turkey’s Army and military officials trust our defense technologies more than those of France, the source was quoted as saying by the Yonhap News Agency in Seoul.

An official at the state-run Agency for the Defense Development (ADD), the main developer of the XK2, confirmed Seoul’s full-fledged efforts to export the tank to Turkey and other countries.

I would be surprised if the XK2 is not exported to Turkey because Turkey has already fielded the Korean K9 SPS system and France has been pushing to keep Turkey out of the European Union so why would they buy tanks from France?

HT: Commenter

It looks like Korea is serious about starting a space industry:

South Korea also plans to build a rocket launch pad on its own soil, though it will focus on uncrewed satellite launches. Hyundai Heavy Industries, the world’s largest shipbuilder, on Tuesday said it had won an order to build South Korea’s first space rocket launch pad.

The contract from the Korea Aerospace Research Institute calls for a launch platform and related facilities at the Naro Space Center on a southern island off the town of Goheung.

South Korea plans to launch a 100-kilogram (220 pound) satellite into orbit from Naro in October 2008. Construction of the space centre will be completed early in 2008.

Following completion of the project, South Korea will become the world’s ninth nation capable of launching a satellite with its own technology. So far it has relied on centres in other countries to send its satellites into orbit.

Financial terms were not given but Hyundai Heavy said it would build launch facilities, fuelling systems and a control room for the launch pad, which will be able to accommodate two rockets.

It will be interesting to see if Hyundai intends to develop this launch capability strictly for domestic Korean use or plan to expand it to compete for example against the Russians for launching international satellites.  It good to see Hyundai looking to the future and getting into the space industry.  I’ll really don’t see any reason why Korea couldn’t make quality rockets considering the technological capabilities of the country. 

Here is a map that shows the island where the launch pad at Goheung will be built:

Goheung is definitely a remote enough area of Korea to build a launch pad at.  It is actually one of the few areas of the country I haven’t been too.  Here is a satellite image of the island that will host the space center:

When this launch pad gets built I will have to get down there to see a launch some time. 

From the Washington Post:

Hyundai Motor Co., the world’s sixth-largest automaker, on Monday denied a British newspaper report that it is interested in acquiring Chrysler, the U.S. unit of German automaker DaimlerChrysler AG.

"We are not considering to buy Chrysler because our hands are full," Hyundai spokesman Jake Jang said, responding to a report in The Times that the South Korean automaker was among companies interested in bidding for the Chrysler Group.

The Times reported on its Web site that Hyundai was thought to be interested in joining possible bidders for the U.S. automaker, without citing specific sources. The paper said that Hyundai was believed to be interested in gaining access to Chrysler’s network of dealerships in the U.S.

Could you imagine 50 years ago if somebody said a South Korean company would be buying out a major US auto maker?  They would be laughed out of the building, so just the fact that Hyundai is contemplating buying a US auto maker is pretty amazing and another sign of how far Korea has come.