New Directions of Korea-India Ties

By Lakhvinder Singh

Within the short period of two decades, after India decided to open up its economic and trade relations with East Asian countries, activity has been growing very fast.

Today, with a trade volume of more than $100 billion, East Asia has become India's principal trade partner, leaving its traditional trading partners such as the U.S. and Europe far behind.

India's economic integration into East Asian economies is growing at a fast pace. Today, India has comprehensive partnership agreements with Japan, Korea and the Association of Southeast Asian Nations (ASEAN).

President Lee Myung-bak's visit to India is coming at a critical time, with the East Asian region undergoing economic and structural changes. Intra-Asian trade and economic exchanges are growing very fast and traditional allies like the U.S. and Europe are losing their economic dominance in the region.

India is being integrated into Asia like never before. If the current phase of interaction between India and East Asia continues, India's economic interaction with the region is expected to grow more than $500 billion within a decade.

Korea's presidential visit is full of symbolism. For the first time since both countries established a diplomatic relationship in 1973, a Korean president will be a state guest at India's Republic Day functions in New Delhi.

This in itself says a lot about the current state of affairs between the two countries. Within a short period of 13 years, this is the third Korean presidential visit to India. Something like this has never happened before in the history of the two countries.

Bilateral trade between India and Korea has been growing rapidly in the last few years. Compared to 2001, when total bilateral trade turnover was $2.52 billion, the total trade has increased by more than 7 times, and was expected to stand at $18 billion at the end of 2009.

During the last three years, the trade between the two countries has shown an increase of more than 100 percent. During 2007, the bilateral trade crossed the $10 billion mark, well ahead of the target set to be achieved by the two countries in 2008.

If this phase of growth continues, the trade volume between the countries could cross the mark of $100 billion within a decade or so.

The Comprehensive Economic Partnership Agreement (CEPA), which became operational this month, is the biggest milestone in the history of the two countries. It is expected to give a big boost to the overall growth of the relationship between the two countries.

The CEPA is expected to play a big role in the expansion of the export market of Korea. Under the CEPA, tariffs on Korean auto parts, the biggest export item to India, are to be reduced to 1 percent over an eight-year period from the current average of 12.5 percent.

This will consolidate the Korean auto industry's share in India. A notable feature of the Korea-India CEPA is that goods made at the Gaeseong Industrial Complex, an inter-Korean economic joint venture in North Korea, will be regarded as having been made in South Korea.

India will also benefit from the CEPA agreement in a substantial manner. The CEPA will allow the temporary movement of professional workers, such as computer programmers and engineers, to Korea and India.

Under the CEPA, 163 such professions are allowed access to the Korean services market. This is the first time that Korea has agreed to such a commitment in its bilateral free trade agreements and this will open up opportunities for Indian English teachers and software engineers to work in Korea.

Korea's CEPA with India is the first free trade agreement with a member of the fast growing BRIC (Brazil, Russia, India and China) nations. For India also, it is the first such agreement with a member state of the Organization for Economic Cooperation and Development (OECD). The CEPA is a win-win situation for both countries.

Today there are many potential areas of cooperation between the two countries. Some important areas where huge potential exists are transportation, robotics, engineering sciences, nutrition, food safety, renewable energy, chemical technologies, biochemical technologies, health sciences, medical sciences, materials sciences and information technology.

Economic cooperation, though important, is not the only area where the two countries have been getting closer to each other. Apart from economic cooperation, India and Korea have also been getting closer in the political and security fields. High level political and diplomatic traffic of top leaders has been growing between the two countries in recent years.

The countries have established a ``Long-term Cooperative Partnership for Peace and Prosperity." An India-ROK Foreign Policy and Security Dialogue has been established to promote exchanges and interactions in the defense field, including the safety and security of international maritime traffic, and cooperation between their navies, coast guards and related agencies.

This has been giving a boost to both countries to work in these fields. After 9/11 in the U.S., terrorism has emerged as a major threat to world peace. Terrorism is no longer an individual country's problem or regional problem.

Even though Korea has not been a direct victim of terrorism it has been playing a very active role in fighting this global menace. It is playing a very active role in both Afghanistan and Iraq. There is great potential for cooperation in fighting against terrorism between India and Korea.

Another potential area of cooperation is sea piracy. Lately, sea piracy has been emerging as a serious threat to the smooth flow of trade in the Indian Ocean. Korea has a high stake in the safety of sea lanes of communication as an export-led country.

The Indian navy patrols a large swath of the Indian Ocean, and can play a very important role in curbing this growing problem. The potential of cooperation between the two navies is very high.

Strategic imperatives are also bringing India and Korea closer together. With the emergence of China as a dominant player in the region, the old U.S.-led balance of power has been giving way to new power equations in the region.

The emerging power struggle in the region has been unnerving for small countries like South Korea. Not wanting to be seen as supporting one side over the other, South Korea has been trying to strengthen its relations with other Asian countries as a third party option.

India, which is emerging as an important player in the evolving security paradigm in the region, is getting special attention from Korean policymakers.

The time has come for India to deeply integrate into East Asia. India should start looking at the whole of East Asia, not just its near east neighborhood, as strategic space. India's relations with East Asia and Korea must go beyond economics and expand to security and the strategic sphere as well.

India must strengthen its diplomatic resources, build a strong knowledge pool, and support Indian intellectuals and experts working in the region wholeheartedly with substantial resources to carry out their work and involve themselves more deeply in East Asian affairs.

India's integration into East Asia is an idea whose time has come. Let us work together to make it happen.

The writer is president of the Indo-Korean Business and Policy Forum and is based in Seoul. He can be reached at contact@ikbforum.com.

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