The problem in context

This study deals with a particular case submitted to the WTO Dispute Settlement Mechanism (DSM) dealing with restrictions on the export of Korean colour televisions sets to the United States. It is a story of how Korea used the WTO DSM as part of an overall strategy to eliminate a trade barrier that had been in place for fifteen years. It is also a story of how Korea's attitude towards the WTO changed. Thus, before we start dealing with this particular case, we need to look at some background, at what Koreans think about trade and their initial perception of the WTO.

Korean development and its attitude to trade

Like many other countries, Koreans tend to have a mercantilist view of trade, where exports are good and imports are bad. Such views are quite surprising, since the value of exports and imports in Korea usually exceed 70% of GDP, and Koreans themselves will readily admit that the country has no choice but to import raw materials, intermediate goods, capital goods and technology from abroad in order to compete in the global marketplace, as well as to fulfil domestic consumer demand. However, the average Korean often believes that Koreans must do everything they can to increase exports, while limiting imports only to ‘necessary’ goods. This mercantilist mindset was born in the 1960s, when Korea's average annual GDP per capita was around $150.