South Korea complains to World Trade Organization over China’s response to THAAD deployment

Chinese Trade Minister Joo Hyung-hwan (File photo by Xinhua)

South Korea says it has complained to the World Trade Organization (WTO) about what it calls China's retaliation against South Korean companies over the deployment of a US missile system in the South.

"We have notified the WTO that China may be in violation of some trade agreements," Trade Minister Joo Hyung-hwan told parliament on Monday, in response to questions about China's reaction to the deployment of the Terminal High Altitude Area Defense (THAAD) system in South Korea.

Joo said the issue was raised with the WTO's Council for Trade in Services on Friday after China imposed restrictions on South Korean companies in the tourism and distribution sectors.

A trade ministry official, who asked not to be identified because of the sensitivity of the matter, said the complaint could not be categorized as legal action but was rather a request for the WTO to look into whether China was upholding trade agreements fairly.

South Korea and the United States say the sole purpose of the THAAD system is to guard against missile launches from North Korea but China has been infuriated by its deployment, saying that its powerful radar could penetrate into its territory.

The first elements of the US-built Terminal High-Altitude Area Defense (THAAD) arriving at Osan US Air Base in Pyeongtaek, south of Seoul on March 6, 2017. (Photo by AFP)

Beijing also says THAAD will do nothing to ease tensions on the Korean peninsula.

China is South Korea's largest trading partner and the dispute over THAAD has resulted in a sharp decline in Chinese tourists in the South's shopping districts.

Chinese authorities have also closed nearly two dozen retail stores of South Korea's Lotte Group amid the diplomatic standoff.

Beijing denies the restrictions are linked to the THAAD deployment, but the South Korean government has offered cheap loans and extended deadlines on existing debt to help businesses that have been affected and has pushed to diversify trade markets.

Efforts to hold direct discussions between the finance ministers of China and South Korea at a Group of 20 meeting in Germany at the weekend fell through after Beijing declined Seoul's request to meet, citing scheduling reasons.