US TRADE LEGISLATION MAY TEMPER SUCCESS OF KOREAN EXPORTERS

US TRADE LEGISLATION MAY TEMPER SUCCESS OF KOREAN EXPORTERS

The largest single contribution for a U.S. Korean war memorial came from the U.S. subsidiary of a foreign-based manufacturer, Hyundai Motor America Corp., according to Col. Bill Ryan of the American Battle Monuments Commission.

The importer of the South Korean-made Excel automobile donated $1 million, and its U.S. dealerships have contributed an additional $204,000 for the monument, which is expected to be built in Washington for about $6 million.Ted Kade, a Hyundai spokesman in Garden Grove, Calif., noted that in addition to being a token of gratitude, the gesture reflects a company-wide sense of accomplishment derived from competing so successfully in the U.S. automobile market.

Hyundai's success story and its future challenges in the U.S. market parallel overall trends in U.S.-South Korean trade.

Since being introduced in the United States in February 1986, the Excel has registered sales of 168,882 in 1986 and 263,610 in 1987.

Sales projections in 1988 are placed at 300,000, according to Mr. Kade. By

comparison, total auto sales in the South Korean domestic market in 1987 were expected to be about 345,000, according to U.S. Commerce Department estimates.

Mr. Kade commented that the U.S. market may be receptive to more Excels, but the company is holding its commitments to U.S. dealers to the 300,000-car level because of manufacturing and delivery limitations.

But Hyundai, like other South Korean exporters, also faces potential restrictions imposed by U.S. trade legislation aimed at closing the growing gap in commerce between the two countries.

The final U.S. deficit with South Korea for 1987 should top $10 billion. There is no official Korean projection for South Korea's trade with the United States this year.

The U.S. trade deficit with South Korea has grown since 1982, when it was under $1 billion, to $7.7 billion during the first nine months of 1987, according to the Commerce Department.

Total bilateral trade in 1986 was about $20 billion, making South Korea the United States' seventh-largest trading partner, the department says. Final figures for 1987 will be released at the end of the month.

In Hyundai's case, the most direct threat to its U.S. market lies in Congress' omnibus trade bill, which would require the president to pursue agreements allowing U.S.-flag ships to transport foreign-made automobiles.

Sen. Frank Murkowski, R-Alaska, noting that Japan has signed four automobile carrier agreements, said South Korean companies need to be made aware that the United States is competitive in providing automobile shipping services.

Beyond Hyundai's specific concerns, the omnibus trade bill contains other amendments potentially posing problems for a wide range of South Korean exporters, according to a report issued in mid-January by William Cooper of the Congressional Research Service.

Mr. Cooper said South Korea would be vulnerable to provisions of the bill that are aimed at the following foreign trade practices:

* Workers rights practices.

* Treatment of intellectual property rights.

* An artificially undervalued currency.

* Anti-competitive business practices including cartels.

Some South Korean exporters stand to be affected by the Gephardt amendment, which requires the president to seek means of reducing excessive trade surpluses rung up by countries using unfair trading practices, Mr. Cooper also noted.

The legislation, sponsored by Rep. Richard Gephardt, D-Mo., would require that surpluses be reduced by 10 percent annually over four to five years.

Aside from the omnibus trade bill, South Korean textile and footwear manufacturers face a tough protectionist bill that has passed the House and is pending in the Senate.

Textiles are South Korea's top export, earning $2.5 billion in U.S. sales in 1986, and over 70 percent of the country's shoe exports are shipped to the United States, according to the Commerce Department.

A lobbyist representing the U.S. footwear industry said the bill stands a chance of being enacted over a presidential veto.

John Gillis, a spokesman for Reebok International Ltd., Canton, Mass., remarked that lower-cost footwear importers stand to lose more than his company, which markets top-of-the-line shoes, if quotas are placed on South Korean shoes.

Mr. Gillis noted, however, that the restrictive legislation is a factor in the company's strategy of diversifying sources of footwear manufacturing. Presently, Reebok obtains 72 percent of the shoes it sells from South Korean producers but intends to reduce that level to 50 percent in two years, he said.

Aside from U.S. legislative matters, the political situation in South Korea also looms important in the trade picture for this year.

President-elect Roh Tae Woo will take over later this month in the nation's first peaceful power transition. He inherits a country beset by political demonstrations and violence and labor strikes in recent times.