By Yi Whan-woo
U.S. President Donald Trump’s protectionist trade policy may push Korea closer to China economically, analysts said Wednesday.
These concerns were raised after Trump decided to pull the United States out of the Trans-Pacific Partnership (TPP). He has also called for the renegotiation of the Korea-U.S. Free Trade Agreement (KORUS-FTA).
Analysts say that Seoul inevitably will need to bolster its exports to Beijing to make up for its reduced trade with Washington, if the renegotiation of the KORUS-FTA fails and their economic relations become weaker.
Such a possible failure is expected to hamper the government’s bid to overhaul its export-dependent economy amid China’s latest retaliation for the planned deployment of a U.S. Terminal High Altitude Area Defense battery in Korea this year.
The retaliatory measures have expanded from the cultural sector to tourism and business, triggering a call to develop a plan to prevent China from exploiting their trade ties and bullying Korea over diplomatic conflicts.
Some skeptics view that the envisioned Regional Comprehensive Economic Partnership (RCEP) will also add to Korea’s woes over being trapped by its economic dependence on China.
The RCEP, the China-led mega-trade bloc involving 16 countries, including Korea, has emerged as a replacement for the TPP after Trump signed an executive order for the U.S. withdrawal, Monday.
Korea, China, Japan, India, Australia, New Zealand and the 10 ASEAN-member states have been discussing the promotion of the RCEP since 2012.
The participating countries account for nearly 30 percent of global domestic product (GDP).
Korea also sought to join the TPP, which was a U.S. initiative, after 12 countries signed it in 2015. It accounted for for more than 40 percent of gross domestic product worldwide.
Some analysts, however, downplayed concerns about a gloomy outlook in Korea-U.S. economic relations.
They also said possible frayed ties between the two allies will not result in Seoul’s accelerated economic dependence on Beijing.
“Our export items to the U.S. are mainly finished goods, such as cars, while we’ve been selling intermediary goods to China,” said Shin Sung-won, director-general of Korea National Diplomatic Academy’s (KNDA) department of international economy and trade studies. “In other words, you can’t make up for a possible reduction in sales to the U.S. by selling unsold items there to China.”
Kim Han-kwon, also an expert at the KNDA, echoed a similar view, citing the simmering Washington-Beijing row over trade.
“Trump mainly targets China in his policy to upend the order of global trade, which can hurt China’s economy,” he said. “Under such conditions, there will be less demand from China to purchase Korean goods.”
Kim remained skeptical whether the RECP can be realized.
“The participating countries are divided over how much they should open the doors to their markets. For instance, Japan wants over 95 percent of the market to be open, while India wants no more than 85 percent,” he said.