More than two years since effectuation, the once-disputed Korea-U.S. Free Trade Agreement now seems to be on track, but its wide range of tariff cuts is now leading to anti-dumping regulation issues.

But export industries, however, have compained that the Korean government has failed to provide a sufficient protective barrier, especially after the trade function was transferred from the Ministry of Foreign Affairs earlier this year.

Last week, the U.S. Department of Commerce kicked off an investigation into foreign steel companies, including Korean ones such as Dongbu Steel, Ajube Steel, Hyundai Hysco and others.

Major U.S. steelmakers earlier filed a lawsuit claiming that Korean steelmakers had engaged in dumping their oil country tubular goods and demanding taxation of up to 158 percent.

Oil country tubular goods are special high-intensity and humidity-proof steel pipes used in drilling for natural oil or gas in offshore areas. Demand for them has risen over the years with the development of shale gas and other energy resources.

Last year, Korean steelmakers manufactured 779,788 tons of OCTG in total, of which 99 percent was exported to the U.S., according to the Korea Iron & Steel Association.

With the FTA in effect, the market price of the steel tubes declined considerably, making U.S. steel companies uneasy.

“Should the U.S. government rule in favor of the complainants, it will strike a critical blow not only on the steel industry but also to the home electronic appliance market,” said an official of a local steelmaker.

In the worst-case scenario, leading electronics companies such as Samsung and LG, as well as automakers, may take a hit in their export sales ― a result quite contrary to the very purpose of the trade pact.

The Korean government, however, is putting up a poor defense against such possibilities, the accused steelmakers claimed.

“This is the first massive anti-dumping lawsuit since the FTA took effect and the government should not lose its initiative against the U.S. counterpart,” said the steel company official.

The problem, according to some, is that inter-state communication is currently divided between the Ministry of Foreign Affairs and the Ministry of Trade, Industry and Energy.

“As the trade function was transferred from the former to the latter earlier this year, the two ministries now need to cooperate in solving these trade disputes,” said Choi Kyung-lim, assistant deputy ministry for trade.

The Foreign Affairs Ministry is to take the lead in inter-governmental communication with the U.S. while the Trade Ministry will focus on communicating with the export industries, he explained.

The Trade Ministry also kicked off an import regulation response team recently, with the aim to better protect local industries in overseas trade disputes.

“But in reality, no top-ranking official or department is directly taking charge of the issue and we fear that the lawsuit may end in enormous financial damage for Korean exporters,” the steel official said.

The U.S. department is to complete its probe by December this year and announce the result early next year, officials said.

By Bae Hyun-jung (tellme@heraldcorp.com)