Recently, the legislative direction of the Online Platform Act (referred to as On-Pul Act), which has been absent from the Korea-U.S. trade negotiation table, is garnering attention. Since it is a matter that the U.S. government and Congress have continuously expressed concern about, there is a possibility that it will come up during future Korea-U.S. summits. The domestic e-commerce and delivery app industries are on high alert.
According to the political circles and the distribution industry on the 1st, the Democratic Party of Korea lawmakers belonging to the National Policy Committee will hold a practical party-government council meeting on the 4th to discuss legislative issues. At this meeting, the Korea-U.S. trade issues, including the On-Pul Act, will be discussed. Kim Yong-beom, head of the President's Policy Office, said in a briefing on the results of the Korea-U.S. trade negotiations the previous day that "there was much discussion on the On-Pul Act during the negotiation stage, but it did not come up at the final negotiation table."
The On-Pul Act is a bill that contains comprehensive regulations for large platform corporations. It is one of President Lee Jae-myung's presidential campaign promises. It consists of the 'Monopoly Regulation Act (Act on the Regulation of Online Platform Monopolies)' to regulate the unfair monopolistic practices of large platform corporations and the 'Fairness Act (Act on the Fairness of Online Platform Intermediary Transactions)' to protect small business owners and self-employed individuals, among others.
So far, the U.S. has expressed concerns about the Monopoly Regulation Act, citing the reason that its companies, such as Google, Apple, and Meta, could be subject to regulation. In consideration of this, the ruling Democratic Party of Korea tried to pass at least the Fairness Act, which includes capping delivery app fees and shortening the settlement period for e-commerce platforms, but it fell through.
For now, the political circles are in a mood to adjust the pace of pursuing the On-Pul Act until the Korea-U.S. summit. A Democratic Party of Korea lawmaker from the National Policy Committee told ChosunBiz that "specific discussions are likely to take place at the Korea-U.S. summit," while adding, "There are concerns about trade friction with the United States. It seems difficult to push it through without resolving issues of reverse discrimination against domestic platform companies, even if it is not a complete withdrawal."
A lawmaker from the People Power Party, which is part of the National Policy Committee, stated that "there is still an opinion to prioritize the Fairness Act. Although there are issues of trade friction with the United States, it seems challenging to proceed without resolving the reverse discrimination problem against domestic platform corporations."
The Fair Trade Commission is also said to be preparing explanatory materials related to the On-Pul Act in response to a request from the U.S. House of Representatives Legislation and Judiciary Committee. Previously, on the 24th of last month (local time), the U.S. House Judiciary Committee sent a letter to the Fair Trade Commission, stating that "the On-Pul Act could have a negative impact on its companies," and requested an explanation of the legislative progress and potential impacts on U.S. businesses by the 7th of next month. The response will also likely be discussed at the practical party-government council meeting on the 4th.
The platform industry, including e-commerce and delivery apps, is closely monitoring the legislative direction of the On-Pul Act. A source from the platform industry stated, "The On-Pul Act will affect the regulatory environment and market structure of domestic platform operators," adding, "The occurrence of reverse discrimination against domestic businesses is the most concerning point. We plan to respond while keeping an eye on follow-up discussions."
Another source from the platform industry remarked, "Discussions on whether to include a cap on delivery app fees in the On-Pul Act or to introduce it in the Food Service Industry Promotion Act have also halted ahead of the Korea-U.S. summit," further stating, "It is time for the political circles to reassess the practical benefits surrounding the On-Pul Act."