S.Korea complains to WTO over China response to anti-missile system

Christine Kim and Jane Chung, Reuters

Posted at Mar 20 2017 06:15 PM

A Terminal High Altitude Area Defense (THAAD) interceptor is launched during a successful intercept test, in this undated handout photo provided by the U.S. Department of Defense, Missile Defense Agency. U.S. Department of Defense, Missile Defense Agency/Handout via Reuters/File Photo

SEOUL, March 20 (Reuters) - South Korea's trade minister said on Monday Seoul had complained to the World Trade Organization (WTO) about China's retaliation against South Korean companies over the deployment of a U.S. anti-missile defense system in the South.

"We have notified the WTO that China may be in violation of some trade agreements," Trade Minister Joo Hyung-hwan told parliament in response to questions about China's reaction to the deployment of the Terminal High Altitude Area Defense (THAAD) system in South Korea.

Joo said the issue was raised with the WTO's Council for Trade in Services on Friday after China imposed restrictions on South Korean companies in the tourism and distribution sectors.

A trade ministry official, who asked not to be identified because of the sensitivity of the matter, said the complaint could not be categorized as legal action but was rather a request for the WTO to look into whether China was upholding trade agreements fairly.

In Beijing, Chinese Foreign Ministry spokeswoman Hua Chunying did not comment directly on the WTO complaint.

"We support normal business and other exchanges between China and South Korea," Hua told a daily news briefing. "But everyone knows this needs a corresponding basis in public opinion."

South Korea and the United States say the sole purpose of the THAAD system is to guard against missile launches from North Korea but China has been infuriated by its deployment, saying that its powerful radar could penetrate into its territory.

Beijing also says THAAD will do nothing to ease tensions on the Korean peninsula.

China is South Korea's largest trading partner and the dispute over THAAD has resulted in a sharp decline in Chinese tourists in the South's shopping districts.

Chinese authorities have also closed nearly two dozen retail stores of South Korea's Lotte Group amid the diplomatic standoff.

Beijing has never explicitly linked the restrictions to the THAAD deployment, but the South Korean government has offered cheap loans and extended deadlines on existing debt to help businesses that have been affected and has pushed to diversify trade markets.

Lawmakers ramped up their criticism of what they say has been the government's lack of an aggressive response to China's actions, which also include a freeze on South Korean television dramas, as well as music and product boycotts.

Seoul's options, however, look limited.

Efforts to hold direct discussions between the finance ministers of China and South Korea at a Group of 20 meeting in Germany at the weekend fell through after Beijing declined Seoul's request to meet, citing scheduling reasons.

(Additional reporting by Ben Blanchard in Beijing; Editing by Paul Tait)