A new model has predicted devastating economic losses for U.S. companies if South Korea adopts a controversial piece of legislation that would regulate transactions with some American firms. The Online Platform Fairness Act, spearheaded by the Korea Fair Trade Commission, has gained momentum in South Korea and is backed by the country's left-wing president.
A Competere Foundation model estimates a $525 billion loss in economic activity in U.S. states over the next decade, with significant losses for major states such as California ($123 billion), Texas ($48.7 billion), New York ($33.9 billion), and Washington ($27.4 billion). The proposed bill would broaden the power of the Korea Fair Trade Commission, which is already facing criticism from lawmakers for unfairly treating U.S. companies.
Lawmakers have warned that South Korea's leadership is now closely aligned with China, and that the country's actions restricting American companies are troubling. Rep. Darrell Issa, R-Calif., expressed concern that South Korea's trade commission resembles the worst of Lina Khan's FTC, rather than the free market tradition that has helped to bring Seoul and Washington together.
The Democratic Party in South Korea holds a substantial majority in the National Assembly, and the proposed bill is pending in the assembly. The party favors progressive domestic policies, which could lead to increased regulatory burdens for U.S. companies. A conservative from the People Power Party, Yoon Suk-yeol, was elected president in 2022 but was impeached in December 2024, and the country is now operating under a full Democratic majority.
International trade and competition economist Shanker Singham warned that Korea is already an unfriendly place for U.S. companies to do business, and that looming regulations will make that environment even worse. Former Utah Republican Rep. Chris Stewart also expressed concern that South Korea's posture could be devastating for more than just tech companies, as it creates more room for Chinese companies to gain market share and influence in one of the world's most important digital economies.
Experts have pointed out that the cost of the economic losses would affect more than just Silicon Valley, tying the losses to a Chinese win as Beijing would likely take up lost market share in South Korea if American companies were to reduce investment. The situation has sparked concerns among lawmakers and experts, with many expressing worry that South Korea's actions will benefit China at the expense of the U.S.
A recent investigation into a U.S. tech company, Coupang, has also raised concerns about South Korea's treatment of American companies. The country fined Coupang roughly $410 million for a data breach, which is the largest fine ever issued for a similar charge. The investigation has led to concerns about the country's investigation into the case and its potential impact on U.S. businesses.
A letter from 50 members of the House of Representatives expressed their concern over what they deemed to be "discriminatory" business practices in South Korea. The letter referenced a previous report from Competere that addressed economic losses in the U.S. as a result of tighter regulations from South Korea, and warned that such regulatory actions will cost $1 trillion in combined economic damage to the U.S. and Korean economies over the next 10 years.
