Each country has its own particular rules on issues of import and export. American trade representatives have been pointing out regions of the world with protective trade policies that limit imports as a way of protecting indigenous business interests, and these officials have worked to try to open markets in countries with such policies. South Korea is an important trading partner for the United States, but it is also a country with rules and regulations concerning imports that prevent foreign firms from competing on an equal footing. This has reduced foreign investment in the region and has also created tensions with various trading partners. An examination of some of the rules and regulations affecting imports shows why this is so.
South Korea has experienced an industrial expansion since the time of the Korean War in the early 1950s, and exports were the key to that expansion. Until 1986, the value of imports was greater than exports, but this situation was reversed in that year when South Korea registered a favorable balance of trade of $4.2 billion. By 1988, the favorable balance had increased to $11.4 billion. A primary concern for economic planners was financing this gap between domestic and imported resources. In the fifties and sixties, much of the trade deficit was financed by foreign aid funds. In the last two decades, though, borrowing from and investment in international capital markets were almost completely substituted for economic aid (Savada and Shaw, 1990, 183).
Korea's recovery from the war in the 1950s and its economic growth in the 1960s came largely from foreign economic assistance. Such aid saved Seoul from having to devote scarce foreign exchange to the import of food and other necessary goods, such as cement. This aid also freed South Korea from the burden of heavy international debts during the initial phase of growth, enabling the government to allocate credit in accordance with planning ...