South Korea

Intelligence for Better Decision Making

Han Deok-soo Vetoes Key Commercial Act Amendment Amidst Business Concerns
April 2, 2025 | Indirect Indicator

Acting President and Prime Minister Han Duck-soo’s recent decision on a key Commercial Act amendment has sparked vigorous debate across the business and legal communities.

**Acting President and Prime Minister Han Duck-soo took decisive action regarding the recently passed amendment to the Commercial Act, a legislative measure that now broadens directors’ duty of loyalty to include responsibilities toward shareholders.**
Approved by the National Assembly on March 13, 2025, this amendment raised significant concerns among business leaders, as its ambiguous provisions risk increasing legal liabilities and introducing management uncertainty. Various government sources and economic organizations have warned that these vague provisions could disrupt corporate decision-making processes and weaken the protection of general shareholders.

**During Cabinet meetings on April 1, 2025, Han exercised his veto power and requested that lawmakers reconsider the amendment.**
In discussions with Cabinet members, he argued that the new provisions might impose unclear civil and criminal liabilities on directors, affecting both large corporations and small to medium-sized enterprises. The proposed changes, he cautioned, could complicate corporate governance and stifle active management, potentially leading to unintended negative consequences for the national economy.

**In response to these concerns, Han proposed an alternative approach centered on amending the Capital Market Act rather than persisting with the Commercial Act revision.**
He contended that a gradual and clearly defined expansion of protections for general shareholders—particularly in high-risk transactions such as mergers and divisions—would be more effective. His proposal calls for further discussions and enhanced legislative consultation to secure shareholder rights without imposing excessive legal risks or uncertainties on corporate management. The request for reconsideration must be finalized before the legal deadline on April 5, 2025.

**Economic organizations, including the Korea Chamber of Commerce and Industry and the Korea Employers Federation, have joined the call for reconsideration.**
They warned that broadening fiduciary duties could trigger a surge in litigation and foster pressures from activist funds, outcomes that may harm corporate management and stifle innovation. These organizations support the veto and advocate for a more balanced revision that safeguards shareholder rights while preserving a competitive and operational environment for companies.
US Tariffs Intensify Economic Tensions with South Korea
April 2, 2025 | Indirect Indicator

The growing economic tension between the United States and South Korea is evident in the new reciprocal tariffs set to affect various South Korean exports.

**South Korea now faces considerable pressure as the United States prepares to impose a series of reciprocal tariffs on a wide range of goods starting April 2.**
Existing measures already include a 25% tariff on key products such as steel, aluminum, and related commodities, with plans to add a similar 25% tariff on cars and auto parts. In addition, the potential imposition of approximately 20% reciprocal tariffs raises the risk of near complete disruption of trade flows, particularly since South Korean exports to the United States represented almost 18.7% of its total exports last year.

**Industries across South Korea will experience increased costs as these new tariffs compound existing duties.**
Key sectors such as automobiles, general machinery, and semiconductors face additional burdens from tariff stacking, and the automobile sector may incur financial losses exceeding $6.7 billion. The prior Korea-US Free Trade Agreement had enabled most South Korean goods to enter the United States duty-free, making the economic shock from these new measures even more severe. Major companies including Samsung Electronics and LG Electronics are already evaluating options that could involve relocating portions of production to the United States market.

**The steel industry, already subject to a 25% tariff, now confronts the possibility that reciprocal measures might raise the tariff rate to between 40% and 50%.**
This sector is particularly vulnerable because the United States remains its most significant export destination. Other sectors, such as the secondary battery industry, might also face challenges, although products such as semiconductors could remain less affected due to their essential role and the limited availability of alternatives in the US market.

**Officials plan to formally communicate the details of the US reciprocal tariff initiative on April 2, with preliminary information possibly released on April 1.**
The strategy, which positions itself more favorably than measures taken by other nations, connects to broader negotiations including the US semiconductor subsidy framework. The public announcement, scheduled to occur in the Rose Garden with Cabinet participation, forms part of a wider review of tariffs on various products imposed by other countries.

Monitored Intelligence for South Korea - April 3, 2025


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(LEAD) Senior U.S. diplomat stresses commitment to 'complete' N.K. denuclearization in call with Seoul counterpart

Yonhap | English | News | April 3, 2025 | North Korea

A senior U.S. diplomat reiterated America’s commitment to the “complete” denuclearization of North Korea during a phone call with South Korea's First Vice Foreign Minister Kim Hong-kyun. The conversation took place as part of efforts to maintain close coordination between Seoul and Washington on North Korean threats and other issues. Deputy Secretary of State Christopher Landau also expressed condolences for the loss and damage caused by recent wildfires in southeastern Korea.

The discussion included pressing security challenges, potential economic cooperation—especially in the energy sector—and the growing investments of South Korea in the U.S. economy. Landau emphasized working collaboratively with allies in the Indo-Pacific to address the challenges posed by a more assertive China, which he identified as the U.S.' primary strategic competitor.

Kim called for strengthening cooperation against North Korea’s nuclear, missile, and cyber threats while pursuing denuclearization. He urged an immediate halt to the military collaboration between Russia and North Korea, stressing that no compensation should be provided for North Korea's actions. Additionally, both sides discussed the U.S. plans to impose reciprocal tariffs and agreed that such measures should not disrupt economic cooperation, with a commitment to further discussions aimed at addressing mutual concerns.

N. Korea denounces U.S., Japan's munitions cooperation, vows to bolster deterrence

Yonhap | English | News | April 3, 2025 | North Korea

North Korea condemned the recent agreement between the United States and Japan to co-produce an advanced air-to-air missile, labeling it as a destabilizing factor in the Asia-Pacific region. The North's defense ministry expressed concerns following an announcement made by U.S. Defense Secretary Pete Hegseth during his visit to Japan, where the collaboration on the AIM-120 advanced medium-range air-to-air missile was confirmed. A representative from the North's armament bureau criticized the escalating military ties between the U.S. and Japan as increasingly aggressive and aimed at deterring regional nations.

In response to the perceived threats, North Korea vowed to strengthen its deterrent capabilities. The official's remarks, conveyed through the Korean Central News Agency, highlighted the need for North Korea to actively counter the unstable security environment fostered by its adversaries. The statement also referenced recent actions by Japan, such as launching a new military command and contemplating the deployment of long-range missiles, which have provoked strong reactions from Pyongyang. North Korea’s heightened sensitivity to Japan’s military enhancements underscores the growing tensions in the region.

상호관세, 사안별 대응 한계…미국산 에너지 수입확대 필요

Mutual Tariffs, Case-by-Case Response Limits… Need to Expand Imports of US Energy

Joongang Ilbo | Local Language | News | April 3, 2025 | UndeterminedTrade Issues and Numbers

Following the release of the "2025 Country Evaluation (NTE) Report" highlighting non-tariff trade barriers, the U.S. Trade Representative (USTR) announced reciprocal tariffs will be implemented, making South Korea's response critical. Trade experts argue that instead of reacting to each finding, Korea should prioritize rebalancing its overall trade relationship with the U.S. by leveraging its industrial and strategic contributions in negotiations.

The NTE Report identified several non-tariff barriers faced by Korea, such as limitations on beef imports, vehicle emissions regulations, drug pricing policies, and network usage fees imposed on content providers. Analysts noted that much of the report is repetitive yearly; thus, they advocate for a measured response rather than a knee-jerk reaction to every complaint. There is a concern that hasty responses could entangle Korea in a confrontational trade relationship similar to that seen under the Trump administration.

Korea's significant trade surplus with the U.S., which rose dramatically in the past year, may place it among the countries facing scrutiny for trade imbalances. Experts suggest that while a review of non-tariff measures is essential, Korea should selectively address U.S. demands rather than capitulate entirely. Emphasizing areas of Korean strength, such as energy imports, and leveraging cooperative ties could enhance Korea's negotiating power, particularly since it was a top investor in the U.S. last year in several sectors.

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