Yeo Han-koo, Minister for Trade, and Jamie Green, USTR Representative. Photo courtesy of the Ministry of Trade, Industry and Energy.

The Trump administration had warned the South Korean government that it could retaliate if Seoul introduced regulations harmful to U.S. tech companies during trade negotiations, Politico reported on September 19 (local time), citing multiple sources.

According to the report, Jamie Green, the U.S. Trade Representative (USTR), and other administration officials repeatedly warned that the U.S. could initiate an investigation under Section 301 of the Trade Act if South Korea failed to comply with agreements related to digital regulations.

Section 301 of the Trade Act grants the executive branch the authority to respond to unfair, unreasonable, or discriminatory acts, policies, and practices of foreign governments that restrict or burden U.S. trade.

The Trump administration used Section 301 to impose U.S. port fees on Chinese-made ships, and President Trump warned in September that the U.S. could launch a Section 301 investigation after the European Union (EU) fined Google.

The U.S.'s indication that it could initiate a Section 301 investigation against South Korea is essentially a threat of retaliation if Seoul pursues digital regulations.

During the negotiations, the U.S. has argued that regulations related to digital services, such as network usage fees and online platforms discussed in South Korea, target U.S. companies like Google, Apple, and Meta, and has demanded their suspension.

The South Korean government has consistently explained that the regulations do not discriminate against U.S. companies, but U.S. industry and political circles have continuously raised concerns and exerted pressure.

As a result, the joint fact sheet released on the 14th, summarizing agreements between the two leaders, stated: "Korea and the United States commit to ensuring that U.S. companies are not discriminated against or face unnecessary barriers in laws and policies related to digital services, including network usage fees and online platform regulations, and commit to facilitating the cross-border transfer of information, including regarding location, reinsurance, and personal information."

However, as the phrase "not discriminate against U.S. companies" reflects the stance South Korea has consistently maintained in response to U.S. claims, it is not yet clear whether this wording alone means the issue has been resolved according to U.S. demands.

Kim Yong-beom, the Senior Secretary to the President for Policy, stated at a National Assembly Steering Committee meeting on the 18th, "I do not believe that wording poses a significant constraint on protecting our digital sovereignty," adding that they are "expressions of basic principles."

According to Politico's report, Representative Green warned of a potential Section 301 investigation during discussions leading up to the South Korea-U.S. summit on August 29, and expressed a similar stance in a meeting with Minister for Trade Yeo Han-koo in September.

The Trump administration is responding to attempts by other countries to regulate large digital platform companies, not just South Korea. Trade agreements that the U.S. has signed with Argentina, Guatemala, El Salvador, and Ecuador also include provisions for refraining from policies that discriminate against U.S. digital companies, such as digital service taxes.

Politico reported that Trump administration officials and U.S. tech industry representatives have expressed confidence that the South Korean government will not breach the agreement.

A White House official confirmed to Politico that Section 301 was mentioned in discussions with South Korea but stated that the U.S. is not yet considering such "coercive approaches."

The official said, "The Koreans understand that tariffs are the stick that we carry."

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