Is garlic out of luck normal or accidental? A Review of Trade friction between China and South Korea

Since the establishment of diplomatic relations between China and South Korea in 1992, economic and trade cooperation has developed rapidly. On the 20th anniversary of the establishment of diplomatic relations, the bilateral trade volume between China and South Korea has increased from US $5 billion to US $256.3 billion in 2012, an increase of 50 times. At present, China has become South Korea's largest trading partner, largest export market and largest source of imports, while South Korea is China's third largest trading partner and fifth largest source of foreign investment. South Korean President Park Geun-hye said trade between China and South Korea could reach 300 billion US dollars in 2015. Chinese President Xi Jinping and South Korean President Park Geun-hye met in Beijing on November 10 last year, and the two sides jointly confirmed the conclusion of substantive negotiations on the China-South Korea free trade zone, which means that a new chapter in Sino-South Korean trade is about to begin.

At a time when the international community is generally optimistic about the prospect of trade between China and South Korea, there was an incident in which 2200 tons of garlic was returned by South Korea in Lanling County, Linyi, Shandong Province. In the face of tens of millions of economic losses of garlic farmers, people cannot help but ask: is the trade friction between China and South Korea a new normal or an accidental event? Will a trade war break out between China and South Korea? How to treat the trade friction between China and South Korea? What are the problems in China's export trade? What experiences and lessons can be learned from it?

A Review of Trade friction between China and South Korea

Since the beginning of this century, several major trade frictions between China and South Korea are still fresh in people's memory. Among them, the most representative and influential are the "garlic incident" and the "kimchi incident".

In June 2000, also garlic, the South Korean government raised the garlic tariff from 30% to 35% at the request of the Farmers' Association in order to prevent the increase in Chinese garlic imports and the fall in domestic prices in South Korea from causing damage to its own garlic farmers. In response, the Chinese government decided to suspend the import of handheld (including car-mounted) telephones and polyethylene from South Korea. Finally, after many consultations, the two sides signed a memorandum of agreement on garlic trade between China and South Korea in April 2001, ending the "garlic incident."

In September 2005, South Korean media reported that the lead content of Chinese kimchi seriously exceeded the standard, and then the Korean Food and Pharmaceutical Safety Agency tested three kinds of parasite eggs in Chinese kimchi. A large number of Chinese-made kimchi were detained at South Korean ports by South Korean commodity inspection and customs authorities, which triggered a "kimchi storm". On October 31, the AQSIQ issued a notice announcing 10 substandard kimgee, chili sauce, barbecue sauce and related products, and decided to ban their import from that day. Later, after consultation between the two governments, the issue was resolved peacefully.

In addition, there are various small-scale frictions in Sino-South Korean trade, and China has become one of South Korea's trading partners with more disputes. For example, in 2010, South Korea's National Plant Quarantine Bureau imposed an embargo on ginger, potatoes and other plants exported from China's Guangdong, Guangxi and Hainan provinces on the pretext that China belongs to banana perforation nematode epidemic areas. In 2014, Jiangsu Maoyuan Economic and Trade Group exported metal silicon to Puya Industrial Co., a wholly-owned subsidiary of Posco, which deducted US $64149.34 on the grounds of unqualified quality (excessive grain size). The garlic dispute once again focused the attention of the public and the media, causing sensitive nerves in China and South Korea.

In the course of the development of trade friction between China and South Korea, it has the following new characteristics:

First, it is usually initiated by the South Korean side. Throughout the several trade frictions since the establishment of diplomatic relations between China and South Korea, South Korea first stirred up trouble, while China responded passively. When the Chinese side actively took counter-measures to force the ROK to come to the negotiating table, the problem could be resolved.

The second is to shift from tariff measures to non-tariff measures, that is, technical trade measures. In the 1990s, China's exports were often faced with the threat of high tariffs in importing countries. With China's accession to the WTO at the beginning of this century, trade frictions are mostly caused by South Korea's use of technical trade measures to prevent Chinese products from entering South Korea.

The third is to shift from safety to quality. In the "garlic incident" in 2000, the "kimchi incident" in 2005 and the plant embargo in 2010, South Korea all focused on product safety, while last year's Puya industrial deduction and the return of garlic this time, South Korean enterprises all talked about product quality. In 2013, Ningbo Port alone received 131 batches of agricultural products returned from South Korea with a value of US $9.34 million, and quality problems became one of the reasons for the return of exported agricultural products, accounting for 1/3 of the total.

Fourth, from the national trade war to the dispute between importers and exporters. The "garlic incident" in 2000 and the "kimchi incident" in 2005 came forward by the Chinese government and resolved the problem through consultation between the two sides. Last year's metal silicon problem took Jiangsu Maoyuan Economic and Trade Group as the protagonist. As for the return of garlic by South Korea this year, the Ministry of Commerce said it was a commercial dispute to prevent the situation from spreading.