Value context and insight. lkm@koreatimes.co.kr
Businesses oppose transfer of trade function to foreign ministry
The transition committee for President-elect Yoon Suk-yeol in session in Jongno, Seoul, Tuesday. Korea Times file
By Lee Kyung-min
By Lee Kyung-min
The Ministry of Foreign Affairs taking over the trade function of the Ministry of Trade, Industry and Energy will significantly undermine Korea's national competitiveness by compromising the efficiency of coordinated responses between the public and private sectors in the event of external uncertainties, business representatives and economists here said Thursday.
Korea's manufacturing-driven and export-reliant economy will face serious obstacles, if key trade directives are determined by the foreign ministry, governed almost exclusively by diplomatic interests, they say. In many cases, the country’s export growth will be subsequently undercut due to a lack of both predictability and influence on the international stage.
Further supporting the view is the escalating disruption in the global value chain, the single most critical risk factor for Korea's exporters monitored and countered by the industry ministry. Policy responses will not be as synchronized or effective, unless backed by the industry ministry's import and export data analysis of raw materials and semi-finished goods.
'Manufacturing and trade inseparable'
“Manufacturing and trade are inseparable,” said Min Hyeok-ki, a research fellow at a trade policy division at the Korea Institute for Industrial Economics & Trade (KIET).
Manufacturing powerhouses ― including Korea, China, Japan, the U.K., Germany and France ― have trade policies with a greater focus on industrial implications, whereas countries rich in natural resources and strengths in agricultural businesses adopt trade policies with more focus on diplomatic concerns.
“Countries with outstanding manufacturing power need to operate closely with industries, especially so since their export-reliant economies are affected heavily by changes in the trade policies of their peers,” he said.
The trade policies are, in his view, increasingly integrated with and expanding into non-trade matters including supply chains, technological hegemony and digitization, a reason why he says the trade-oriented and overarching policy initiatives will be better outlined by the industry ministry with trade functions intact.
“A closer coordination between industry and trade policymakers and businesses will lead to quick adjustments in a fast-changing business landscape,” he added.
According to a survey released Wednesday by the Korea Industry Alliance Forum (KIAF), a private organization representing Korea's business interests, nearly nine out of every 10 exporters said trade functions should be retained by the industry ministry.
When multiple answers were allowed, 51.6 percent said they would be able to communicate better with the industry ministry than the foreign ministry, while 50.8 percent said trade affairs are an extension of industrial policies.
Over 46 percent said they would like to continue to have access to the trade infrastructure established by the industry ministry.
About 32 percent said the industry ministry is better positioned to weather global supply chain crises, while over 22 percent said they fear that economic interests will be eclipsed by international politics under the foreign ministry.
KIAF said it received a written opinion in favor of the status quo from the associations of 16 industries including semiconductors and displays, petrochemicals, automobiles, battery, shipbuilding, steel and bio.
“The reorganization of key government ministries should reflect the opinions of firms, the stakeholders, not that of former bureaucrats. We will submit our survey results to the transition committee and the industry ministry,” KIAF said in a statement.
Meanwhile, the issue was sparked by President-elect Yoon Suk-yeol's transition committee chairman Ahn Cheol-soo, who proposed during his own presidential campaign to transfer the trade function from the industry ministry to the foreign ministry.
Many said this was a move orchestrated by former foreign ministry officials seeking to restore the trade function that was ceded to the industry ministry during the former Park Geun-hye administration.