Washington And Seoul Switch To Snarling

Anti-Americanism is on the rise in a key Asian ally. Regional tensions, misdeeds by U.S. servicemen, and trade tiffs over everything from autos to telecommunications are damaging relations. America and Japan? No, this time sparks are flying between the U.S. and South Korea.

Indeed, ties between Washington and Seoul are even more strained than U.S.-Japan relations have been in recent years. U.S. prosecutors earlier this month charged a Korean-American intelligence analyst with spying for Seoul. And the U.S. may soon file three complaints against South Korea at the World Trade Organization. Washington tried to dispel suspicions of a rift by sending a top State Dept. official to Seoul in October. But that didn't fool anyone. "It's a very, very troubled relationship," says a U.S. government Asia expert.

SEEDS OF MISTRUST. Behind all the friction is a change in attitude on the part of both countries. With China's influence growing, U.S. interests in the region go beyond protecting South Korea from the North. The U.S. long-term goal: to reunify the countries. But South Korea disagrees with the U.S. over timing and terms of reunification. On trade, after supporting the South militarily for 45 years, the U.S. wants access to its middle class. South Koreans, emboldened by their economic might, are staking out positions at odds with those of the U.S.

The seeds of mistrust were sown in 1994, when the U.S. struck a deal with North Korea in which Pyongyang pledged to freeze its nuclear-weapons program in return for fuel oil and two nuclear reactors, to be financed by South Korea. But Seoul is fearful that the U.S. may be cozying up to the North at its expense. Seoul's suspicions were renewed by Secretary of State Warren M. Christopher's response when a North Korean submarine ran aground off the South's coast in mid-September. Christopher's admonition that "all parties...avoid taking any further provocative actions" was resented by Seoul for implying that it was at fault.

Administration trade warriors, meanwhile, are turning up the heat on Seoul. Two 1995 WTO cases charge South Korea with discriminatory treatment of imports. Now, the U.S. is mulling three more cases. The Clintonites fume, for example, over the higher taxes Seoul imposes on big cars and its failure to adopt global copyright protections.

Such hurdles, however, aren't apparent from trade figures. After years of deficits, the U.S. last year ran a $1.2 billion trade surplus with South Korea. U.S. officials expect it to grow modestly this year. Still, argues Acting U.S. Trade Rep Charlene Barshefsky, South Korea is "an extremely difficult market for U.S. business to penetrate." Detroit's Big Three, for example, must battle an 8% import tariff and excise taxes of up to 20% on large cars. Thanks to surging demand, imported car sales have jumped in the past 18 months but still account for just 0.7% of the domestic auto market. Notes Clyde V. Prestowitz Jr., president of the Economic Strategy Institute: "Korea is following the same pattern as Japan. If they make it, they don't import it."

Seoul maintains that it has lowered tariffs and excise taxes. But the Clintonites brush aside such arguments. The South's lament that the U.S. appears to be abandoning its ally "verges on paranoia," says one senior U.S. official. Still, Seoul knows it depends on the U.S. militarily. So the two will be uneasy allies--at least until reunification is resolved.

Before it's here, it's on the Bloomberg Terminal.