US TRADE OFFICIAL HINTS AT REPRISALS AGAINST KOREA

US TRADE OFFICIAL HINTS AT REPRISALS AGAINST KOREA

A senior U.S. trade official hinted at reprisals against South Korea if it did not soon open many of its markets to foreign suppliers.

Clayton Yeutter, the U.S. trade representative, warned that some powerful Korean forces are promoting a more inward-looking, mercantilistic economic strategy. The certain outcome of these policies would be heightened confrontation with the United States and others, and ultimately sanctions on Korean exports by someone, perhaps even the United States.Mr. Yeutter, addressing the U.S.-Korea Society in New York, said, however, that he is encouraged by recent signs that South Korea will open its markets, strike a better balance between export-led growth and domestic consumption, and let its currency appreciate.

But, he said, it remains to be seen whether or how these steps will be implemented.

We are disappointed with Korean foot-dragging in (liberalizing) trade in services, he said. He cited Korea's limits on foreign bank branches, a ban on advertising-agency branch offices, and the postponement until next year of branch offices for shipping services.

This must change, he said.

Mr. Yeutter also scored South Korea's near-total ban on imports of high- value agricultural products, such as beef, frozen potatoes and alfalfa cubes and bales. This situation, he said, cannot continue.

South Korea's awarding exclusive manufacturing rights for some pharmaceuticals to Korean firms and the Korean Monopoly Corporation's refusal to compete on a fair basis with American cigarettes are other significant irritants, he said.

We are occasionally accused, he said, of being too heavy-handed . . . in our demands for fair trade . . . But we cannot and will not pull back just

because an issue proves to be 'sensitive' in a foreign country.