South Korea believes that U.S. sanctions are almost inevitable unless trade disputes are resolved quickly, according to government officials. They said Seoul would urgently try to settle the trade disputes and forestall sanctions, but added that they had few illusions about their chances of success.
Washington has threatened sanctions if Seoul fails to reduce its trade imbalance with the United States by slashing duties on such U.S. products as cigarettes, importing more U.S. farm products and allowing American insurance companies to set up joint ventures. On Friday, President Reagan agreed to remove South Korea from the list of developing nations eligible to export a wide variety of goods to the United States duty-free.
South Korean ambassador Kim Kyung-won recently presented a draft package of proposals to ease trade friction to U.S. Trade Representative Clayton K. Yeutter in Washington. Seoul offered to cut the price of American cigarettes by nearly half, resume imports of U.S. beef for tourist hotels after parliamentary elections due by April and allow U.S. life insurance companies to operate in joint ventures with local companies other than the 15-biggest conglomerates.
"There has been no official response so far, but we think our efforts to find a compromise were not successful," said a Seoul official who asked not to be identified. "It seems, however, very hard for us to find a solution to all these very strong U.S. demands."
South Korea had a trade surplus of $10 billion with the United States in 1987, compared to a surplus of $7.6 billion in 1986.