UPDATE 2-S.Korea, China look for WTO support over U.S. tariffs on washing machines, solar cells

machines, solar cells@ (Releads, adds China's response, analysts comment, background)

SEOUL, Jan 23 (Reuters) - South Korea said on Tuesday it would complain to the World Trade Organization (WTO) over U.S. President Donald Trump's decision to slap steep tariffs on imported washing machines and solar panels, and China called the U.S. move an overreaction.

U.S trade policy, especially the use of punitive duties, has led to a growing list of reproaches from trading partners concerned by Trump's protectionist leanings.

"The latest safeguard measures are in violation to WTO rules," South Korea's trade minister Kim Hyun-chong said in a meeting with industry officials.

Trump's tariffs have dealt a heavy blow to South Korea's Samsung Electronics and LG Electronics, who together sell between 2.5 million to 3 million washing machines annually to the United States, making around $1 billion in export earnings.

"The United States has opted for measures that put political considerations ahead of international standards," South Korea's trade minister said.

"The government will actively respond to the spread of protectionist measures to defend national interests," he said.

China, the world's biggest solar panel producer, also responded swiftly to the U.S. move, branding it an overreaction that would harm the global trade environment for affected products.

"The U.S.'s decision to adopt tougher tariffs this time is an abuse of trade remedy measures, and China expresses strong dissatisfaction regarding this," Wang Hejun, head of the Trade Remedy and Investigation Bureau at the Chinese commerce ministry, said in a statement on its microblog.

"The U.S.'s adoption of restrictive measures against imported solar panels and washers is not only detrimental to the healthy development of the industries in the U.S., but will also worsen the global trade environment of relevant products," Wang said.

"China will work with other WTO members to resolutely defend its legitimate interests in response to the erroneous U.S. decision."

India has also recently re-opened a U.S. dispute, alleging Washington has failed to comply with a ruling on solar power.


The decisions in the two "Section 201" safeguard cases for washing machines and solar cells came after the U.S. International Trade Commission (ITC) found that imported products were "a substantial cause of serious injury to domestic manufacturers."

The tariffs being imposed on washing machines exceeded the harshest recommendations from ITC members, while the solar tariffs were lower than domestic producers had hoped for.

Trump ignored a recommendation from the ITC to exclude South Korean-produced washing machines from LG from the tariffs.

The United States will impose a 20 percent tariff on the first 1.2 million imported large residential washers in the first year, and a 50 percent tariff on machines above that number. The tariffs decline to 16 percent and 40 percent respectively in the third year.

A 30 percent tariff will be imposed on imported solar cells and modules in the first year, with the tariffs declining to 15 percent by the fourth year. The tariff allows 2.5 gigawatts of unassembled solar cells to be imported tariff-free in each year.

Some analysts in Seoul believed Trump was intensifying pressure on its Asian ally to rely more on the United States when it comes to dealing with North Korea, and also to gain leverage renegotiating a bilateral free trade pact that Trump has previously labelled a "horrible" deal.

"Security and trade are linked to each other under Trump," said Choi Won-mog, an international trade law expert at Ewha University.

A filing published by the World Trade Organisation on Jan. 12 showed South Korea had already asked for authorisation to impose annual trade sanctions worth at least $711 million on the United States, in response to the dispute over washing machines.

South Korea also asked for permission to impose an open-ended amount of trade sanctions if Washington broke the same rules again with regard to other products.

Both Samsung Electronics and LG Electronics expressed concern over the U.S. action, saying it would hurt American consumers and jobs.

LG Electronics shares fell as much as 5 percent in Seoul trading but recovered to stand just 1.8 percent lower than Monday's close, while shares in Samsung Electronics were up 0.83 percent in line with the South Korean market's 0.9 percent gain.

South Korea has already demanded compensation because the United States had failed to meet a Dec. 26 deadline to comply with a ruling against duties of up to 82 percent it had earlier imposed on appliances made by Samsung Electronics, LG Electronics and Daewoo Electronics. (Reporting by Ju-min Park and Hyunjoo Jin, additional reporting by Stella Qiu in BEIJING, Joyce Lee in SEOUL; Editing by Simon Cameron-Moore)