Barriers to exports sour sweet smell of success

Date: 17/04/1997

BIG-name perfume and cosmetics companies are considering lodging a formal complaint with the European Commission against South Korea after facing extra hurdles to their exports.

The sweet smell of export success for such companies as L'Oreal, Christian Dior, Procter and Gamble, and Unilever has turned sour over the last month as Seoul has stepped up its barriers to western luxury goods.

“We are very concerned about developments,” said a spokesman for the Brussels-based European Cosmetics Toiletry and Perfumery Association (COLIPA).

South Korea recently introduced slower, more sophisticated registration procedures for

western cosmetics. These have made an already complicated registration regime, whereby every product must be registered and accepted by government bodies no matter how slight the change from the previous version, even more complex. Marketing in Europe is much simpler.

South Korea, like much of Asia, has been a high earning market for Western cosmetics companies, with their products carrying a certain high-class cachet with buyers.

“It is a very big market,” said the COLIPA spokesman, adding that the association was working out just how big the market is in preparation for a complaint to Commission trade officials.

Cosmetics is one of several sectors feeling the brunt of South Korea's 'frugality' campaign.

Western car companies have also been targeted for more rigorous imports and standards procedures on entry into the country as the government calls on citizens to cut down on their consumption of expensive, mostly western, luxury goods.

A consumer boom in South Korea has sucked in exports and led to a dramatic increase in the country's trade deficit.

Seoul, faced with Commission threats of a complaint at the World Trade Organisation against what are described as serious non-tariff barriers, says the frugality campaign has been led by citizens' groups and has nothing the do with the government. The campaign has been officially condemned by the country's finance and commerce minister.

Commission and US trade officials have already jointly highlighted the new South Korean barriers at WTO sessions in Geneva.

But, ironically, Brussels and Seoul last week signed a customs cooperation agreement - the first of its kind - aimed at simplifying procedures and fighting fraud by boosting contacts between officials from both sides.

The agreement has its origins in the summit between EU and Southeast Asian leaders in Bangkok last year.