Pacific Rim: off and running

National Review, August 17, 1992 by Priscilla L. Buckley, William F. Buckley, Jr.

SEOUL--Our week-long trip begins in South Korea, and our first stop is the Residence, the official home of U.S. Ambassador Donald Gregg and his wife, Meg, who happen to be the father- and mother-in-law of Bill Buckley's son, Christopher. The Residence, built in 1971 on the site of an old Korean country house, is itself Korean in style, thanks to the insistence of the then ambassador, the late Philip Habib. "Otherwise," comments Mrs. Gregg, "they would have put up a generic State Department embassy."

Ambassador Gregg has summoned his country team to brief us on South Korea's prospects. Seoul is only fifty miles from the Demilitarized Zone (DMZ), and Communist North Korea's propensity for trouble-making remains high. Only days before we arrived, a band of Kim Il-sung's soldiers had been caught trying to infiltrate the South. North Korea's nuclear-weapons program is a permanent source of anxiety-and a reason why most South Koreans devoutly wish the American presence to continue.

But despite the threat from Pyong-yang, South Korea has successfully entrenched democracy. Reh Tae Woo will be the first Korean president not to seek a second term. And the election that looms in December had, at the time of our late-spring visit, a very American feel, with candidates from the ruling and opposition parties--and a Ross Perot look-alike, Chung Joo Yung, the founder of Hyundai. The results may well hang on economic factors.

Doing Business in Korea

THE transcendentally good news is that we are talking about a country that rose from the ashes of the war with the North and for years has managed a 7 per cent annual rise in GNP.

But this rise is now threatened by two factors, one of them an extraordinary 60 per cent rise in wages given out during the past three years, well above corresponding gains in productivity. That and an inflation rate that is pounding along at 9 per cent (the official figure), or perhaps as high as 15 per cent.

"If you remember one thing of all that I am about to tell you," an official at the Chamber of Commerce stresses, "it is that in the long run it pays to do business in Korea." That, presumably, is why there is a robust community here of American entrepreneurs. But their complaints are eloquent, and it is heartening that high officials in the government are sympathetic to those complaints, even if they are not about to do anything to cope with them; not with elections coming up, and a new president scheduled to be sworn in a few weeks after our own Inauguration Day.

What are such obstacles? They begin with something very much like a national mood of xenophobia--a mood entirely inconsistent with the personal warmth of the South Korean. No doubt much of it traces to the Japanese occupation for 35 years, punctuated by acts of violence, many of them sadistic. Details continue to transpire, as when we read recently about the slave labor in prostitution. The Japanese grudgingly admitted that there were grounds for reparations and some years ago paid out a half-billion dollars or so. But unlike Germany, where Hitler tales are a major industry, the Japanese seek to discourage public knowledge of their atrocities.

Then there are the minor annoyances. The volume of piracy in South Korea is quite extraordinary. You can buy a green soft-drink can labeled "Sprite," and one that looks exactly like it, only it is labeled "Spriten." The former is the property of a U.S. company, the latter, the property of a South Korean pirate. Up until a year or so ago, an estimated 25,000 South Korean mom-and-pop houses were busily engaged in making unlicensed copies of everything from Casablanca to Lotus 1-2-3. Stealing is not the best way to cultivate commercial affections, and the government is finally moving in to enforce what are called Intellectual Property Rights.

And here is a striking example of how to discourage a native from buying an American Mercury Sable. The price of this model, in the U.S. in 1991, was $16,000. The tariff in South Korea is $3,200 (20 per cent). But then there is a special excise tax of $4,800, followed by an "Education Tax on Special Excise" of $1,440, followed by a Banking & Customs Clearance fee of $480: so that the cost to the distributor in Seoul is now $25,920. He of course has to have a markup, and this is $5,184. But before the car moves, there is the value-added tax of $3,110, so that now the retail price on the showroom floor is $34,214 .... That is the kind of thing that inflames American car manufacturers; and, for that matter, Americans in general. It cools us off a little to reflect that we sell more to South Korea than it sells to us.

On the Front Line

PANMUNJOM--It takes an hour and a half nowadays to cover the fifty miles from Seoul to the DMZ. It took Kim Il-sung's soldiers a day and a half to make the journey, tearing through thinly manned positions in the opening offensive of the Korean War, in June of 1950. Hung Choo Hyun, the current South Korean ambassador to Washington, was ten years old at the time and would be orphaned within days of the offensive. In Seoul 1950 as in Hue 1968, the Communist invaders rounded up hundreds of potential political opponents and shot them out of hand.