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    THAAD vs Cosmetics: China's Retaliation Concerns Over MD Dispute With Seoul

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    Annual reports of South Korean cosmetics exporting companies will be disclosed in February to draw a line under media disputes on whether any restriction were put on the import of South Korean beauty products to China as countermeasures against THAAD system deployment.

    Several major South Korean media outlets have recently reported, citing industry sources, that the Chinese government is putting pressure on South Korean cosmetics manufacturers in the wake of the South Korean government’s decision in favor of the deployment of the THAAD system.

    South Korean media also reported, allegedly citing high officials from Chinese Ministry of Commerce, that the issue of the South Korean cosmetics import ban will be discussed at a meeting of the Joint Committee on Free Trade Agreement between China and South Korea on January 13.

    Reports say that the issue will be discussed at the ministerial level if necessary, and would therefore be an official recognition that China is taking economic retaliation against Seoul's decision to deploy THAAD.

    Officials from the South Korean Ministry of Trade, Industry and Energy reportedly said that the issue surrounding the import ban of cosmetics will even have a higher priority than the problem of non-tariff barriers.

    Many South Korean companies are heavily dependent on Chinese consumers and travelers as their main revenue sources.

    Chinese officials publish the results of quality checks of imported food and beauty products every month. In November 2016, 19 out of 28 beauty products that failed to receive import approval from the Chinese authorities were South Korean made goods.

    Sputnik Korean talked to a representative of one of a Korean cosmetics company who asked not to be named.

    “For a number of reasons we cannot say yet that there is a correlation between THAAD deployment and tightened import regulations on South Korean beauty products,” he said.

    This enterprise was not on the list of cosmetics makers that failed to pass the quality check.

    “There were no official reports from China about any import restrictions on South Korean products, so we cannot speak about some political or diplomatic component of our commercial success or failure,” the unnamed representative added.

    Mirroring the row between Beijing and Seoul, South Korean cosmetics makers hit 52-week lows on the local stock market on Tuesday. However, the source was reluctant to blame China’s alleged economic retaliation.

    “Stocks can fall for very different reasons. It is very dangerous to explain the drop being due to political tensions between trade partner countries; it is just bad for the company, for its future trade,” he said.

    Since late last year as the bilateral relations soured over the THAAD deployment plan, which China insists could compromise its regional security interests, Chinese investors withdrew money from South Korea's stock market on a massive scale.

    Also, popular South Korean entertainers have virtually been banned from performing in China. More recently, the Chinese government also rejected South Korean airlines' plan to operate chartered flights to China ahead of the busy Chinese New Year holiday season.

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    Tags:
    trade, sanctions, missile defense, Terminal High-Altitude Area Defense (THAAD), China, South Korea
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