The Korea Herald


[Business Diplomacy] Korean firms evolve to stay on top of compliance: Kim & Chang lawyers

Establishing supply chain traceability system emerges as key to deal with complex web of international regulations

By Park Han-na

Published : June 17, 2024 - 15:46

    • Link copied

(From left) Kim & Chang lawyers specializing in international trade Kim Seong-joong, Hwang Min-seo, Lee Sun-yul and Jung Young-jin pose for a photo before an interview with The Korea Herald at the law firm's office in central Seoul. (Lee Sang-sub/The Korea Herald) (From left) Kim & Chang lawyers specializing in international trade Kim Seong-joong, Hwang Min-seo, Lee Sun-yul and Jung Young-jin pose for a photo before an interview with The Korea Herald at the law firm's office in central Seoul. (Lee Sang-sub/The Korea Herald)

This article is the first installment in a series of interviews and analyses on how South Korean corporations can sharpen their diplomatic capabilities to brighten their prospects for overseas growth in this mega election year around the world. -- Ed.

South Korean companies used to respond belatedly to regulatory changes in overseas markets, but now they predict and monitor potential legislative shifts in advance, showing the economy’s improved capability to do business in overseas markets, international trade lawyers at Kim & Chang said.

“I would say they are now in the driver's seat," said Kim Seong-joong, a lawyer at the Seoul-based law firm during an interview with The Korea Herald. "For example, our work on foreign trade was focused on supporting our clients to find ways to minimize antidumping duties already imposed on them by US authorities."

Demand for international trade legal advice from export-oriented Korean companies is increasing due to the global protectionist trend and the intensification of trade disputes due to the US-China tech war.

A group of Kim & Chang attorneys including those specialized in cross-border mergers and acquisitions, international sanctions and trade agreements, joined the interview to shed light on changes in the global trade environment and the complex web of international regulations.

"As Korean companies grew big enough to invest in the US, they wanted to take more proactive and aggressive actions like finding ways to receive more subsidies and tax breaks from US federal and state governments through negotiations," said Jung Young-jin, who also serves a registered panelist at Korea-US FTA’s dispute settlement body and a registered arbitrator at the World Bank’s International Centre for Settlement of Investment Disputes.

Making direct investments on foreign soil involves a comprehensive understanding of legal and regulatory frameworks: from federal and local laws to corporate, securities exchange and antitrust laws.

With the growing challenges in the increasingly complex trade landscape, Korean companies' concerns have deepened as much as their global presence has grown.

“Enterprises that received tax incentives for setting up production facilities in the US could risk coughing up taxes or changing business structures if they were later found not to have met numerous criteria required to be eligible for such benefits,” said Kim & Chang attorney Hwang Min-seo, whose major clients include semiconductor, automobile, machinery and chemical companies.

As countries are enacting laws and directives that require companies to assess their suppliers' environmental and human rights practices, Korean enterprises are rushing to establish an internal traceability system involving assessing and problem-solving for all types of risks surrounding supply sources and their potential risk areas.

“Companies feel the growing necessity of solutions that ensure their business is on the right side of the law throughout the whole supply chain, and it has become an important part of lawyers’ work too,” Kim said.


As Korean investments in the US have significantly increased in recent years, companies and investors are paying keen attention to how the upcoming US presidential election will affect economic policies and their businesses.

Korean conglomerates up the ante in the US on the heels of industrial policies such as the Inflation Reduction Act, the most significant US legislation to address climate change, and the CHIPS and Science Act, designed to strengthen the US semiconductor supply chain through tax incentives, grants and loans.

The presidential election is not the only vote taking place in the US this year. There is also a congressional election.

Regarding the prospect of the IRA, passed by Senate Democrats and signed into law by President Joe Biden two years ago, Kim said a full repeal of the package is highly unlikely. “It does not depend solely on who wins the presidential seat. You have to look at the White House, the two houses of Congress as well as local areas to predict the fate of companies wishing to benefit from the IRA."

“A full repeal of the IRA is an extreme scenario that doesn’t seem to be in the minds of the US government or most Korean companies," he said.

The lawyers said the CHIPS and Science Act will be even less swayed by the US presidential election results than the IRA.

The Democratic and Republican parties have different directions on energy policy. The former focuses on eco-friendly approaches and responses to climate change while the latter leans towards traditional energy sources like oil and coal along with gasoline-powered cars and trucks.

“But they are on the same page on the need to foster the semiconductor business in the country. There is less conflict of opinion about the legislation than the IRA," Kim said.

Multiple complex factors

Enterprises face the daunting task of monitoring regulations and maintaining compliance across their product portfolio in the ever-changing regulatory environment.

They are required to stay vigilant about growing protectionism, trade tensions and geopolitical risks to keep their businesses on the right side of the law.

“There are many more complicated factors entangled in regulatory changes than just the change in administration,” said Lee Sun-yul, a foreign attorney at Kim & Chang, specializing in cross-border mergers and acquisitions, private equity and real estate transactions.

Lee took as an example the expanding power of the Committee on Foreign Investment in the United States, or CFIUS, an interagency committee that reviews the national security implications of foreign investments in US companies or operations.

While transactions involving a change of control were subject to approval from the CFIUS in the past, now most non-US nationals seeking to take even noncontrolling stakes in US companies must get the nod from the committee.

The CFIUS process has become more challenging for foreign companies and investors as the committee stretches its jurisdiction arm.

“I think it is a trend in the US to tighten control on foreign investment and I don’t think the US presidential transition will affect it much so as to reverse the trend,” he said.

When Biden was inaugurated, people predicted that the new administration would ease sanctions against Iran and China compared to his predecessor.

“What we see now when Biden’s term is nearing its end is that regulations against China have strengthened and there's been no relaxation of the Iran sanctions. I would say political dynamics and diplomatic issues had a bigger impact than the president’s political tendency,” he said.