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SEOUL-South Korea narrowly escaped a ban on TV advertising of bottled water, but the result could be a ban on all advertising for the product.

Reasoning that bottled water advertising reflects poorly on the quality of the country's tap water, South Korea's Environment Ministry proposed March 10 to halt TV spots for saengsu, or bottled water, while permitting ads in newspapers and magazines and on radio.

"TV commercials of bottled water are apt to arouse public mistrust of tap water and create discord among those who can afford to buy it and those who cannot," said the Environment Ministry.

But the government's Finance-Economy Ministry stepped in last month, determining that the country can't discriminate among types of media.

In essence, they decided: Either ban all ads or make them all legal.

To discourage sales, however, the Finance-Economy Ministry decreed that as of May 1 a 20% tax be levied on each bottle sold to pay for water quality improvement nationwide.

Until the Finance-Economy Ministry makes an actual decision, the TV ban stands.

While there are no figures on advertising dollars at stake, an ad ban of any type would cause a wellspring of trouble for the country's 14 licensed bottled water companies and foreign producers.

French brands Evian, distributed by local company Sang Ah Pharmaceutical, and Volvic, distributed by Nong Shim Foods Co., were permitted here only last month. Neither brand advertises here.

It was only last year, in fact, that the government dismantled its 17-year-ban on sales of any saengsu to South Koreans. Sales for export or to foreigners living here were exempted, but South Koreans consumed 97% of the 243,200 tons of bottled water produced in 1993.

Then last March, the Supreme Court, the nation's highest court, said the bottled water ban infringed on the Constitutional right to happiness.

The largest local producers in the $43 million market are Jinro Mineral Water Co. and Diamond Mineral Water Co., and some 500,000 tons of water produced by unlicensed bottlers found its way into the market. Jinro's agency is Intermax Ad Communications. Diamond has no agency.

The government might have a point that bottled water makes South Koreans suspicious of the tap. Market surveys by Evian and Volvic last year found that one of every five Seoul consumers regularly drinks bottled water while less than one in 100 take it from the tap.

Still, although there is a big thirst for bottled water here, the imported brands face an uphill price battle to compete with inexpensive local brands priced at $1.20 for a 1.5 liter bottle.

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