Kang Seung-woo is the Business Desk editor at The Korea Times. Prior to this position, he covered politics, national affairs, finance and sports.
US-led initiative expected to bolster economic partnership with Korea
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By Kang Seung-woo
Seoul needs to seek ways not to harm ties with China
By Kang Seung-woo
Korea's decision to participate in the U.S.-led Indo-Pacific Economic Framework (IPEF) is expected to bolster the economic partnership between Seoul and Washington, according to diplomatic observers.
However, Seoul is also required to make efforts to prevent participation in the IPEF from adversely affecting its relations with China, the nation's largest trading partner, they added.
On Wednesday, the presidential office announced its decision to join the IPEF, promoted by the United States to counter China's influence in the region. Relatedly, President Yoon Suk-yeol is expected to announce Korea's intention to join the initiative during his summit with U.S. President Joe Biden, Saturday, and plans to attend a summit virtually for the launch of the trade and economic initiative in Japan, May 24.
“I think the IPEF contains things that are useful and beneficial to do, particular the digital module. More broadly, ROK participation would reinforce our burgeoning U.S.-ROK economic partnership,” said Robert Manning, a senior fellow at the Atlantic Council. The ROK stands for the Republic of Korea, Korea's official name.
“But it must be understood that IPEF is not an 'economic framework,' as advertised. It is better than nothing, and economic stuff worth doing, cobbled together by the White House which saw that its Indo-Pacific strategy had a gaping hole in it that China was driving a truck through.”
Soo Kim, a former CIA analyst and current policy analyst at the Rand Corporation, also said, “Korea's participation in the IPEF might be a 'soft step' to start defining the contours of Seoul's position between Washington and Beijing."
The Biden administration unveiled the IPEF initiative during the East Asia Summit (EAS) last October as a regional initiative encompassing major Indo-Pacific countries and it will cover four pillars ― fair and resilient trade; supply chain resilience; infrastructure, decarbonization and clean energy; and tax and anti-corruption.
According to the presidential office, there are eight countries that have joined the trade and economic initiative.
Kim Yeoul-soo, the chief of the Security Strategy Office at the Korea Institute for Military Affairs, said an early participation in the IPEF will help Korea expand its presence in the initiative.
“The decision will help Korea play a role in rule-making of the new platform in the four key areas,” he said.
According to the Ministry of Trade, Industry and Energy, the IPEF participation is expected to help diversify and stabilize supply chains of semiconductors, clean energy, key minerals and other items, while deepening cooperation with major regional players will help strengthen corporate competitiveness and create more chances for overseas businesses.
Amid the intensifying strategic competition between the U.S. and China, the IPEF is seen as a tool to establish a supply chain that excludes China in key areas such as semiconductors and batteries.
In that respect, Chinese Foreign Minister Wang Yi opposed the negative tendency of decoupling and cutting off chains, insisting that the global industrial and supply chains remain stable and smooth during his virtual meeting with Foreign Minister Park Jin, Monday.
“Given the nature of the IPEF, it is a concern that the Chinese government is opposed to Korea's participation, as evidenced by a phone conversation between Yoon and Chinese President Xi Jinping, during which they agreed to work together on issues, including supply chains, as well as the Park-Wang video conference,” Kim Yeoul-soo said.
Manning said the exclusion of China ― despite its economic influence in the region ― may bring about side effects.
“With no market access or trade dimension, and by excluding the region's No. 1 trading power and major exporter of capital, it may be counter-productive and generate an unwanted Chinese response,” he said.
“It would have been far more beneficial both to U.S. interests and to the Asia-Pacific region if the U.S. simply rejoined CPTPP,” he added stressing the importance of having a hand shaping the rules.
The CPTPP represents the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which is a trade agreement among Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Concerns are lingering that the IPEF participation may lead to another Chinese economic retaliation. In response to Korea's approval of the deployment of the U.S. anti-missile shield here, the Chinese government responded by carrying out an economic retaliation campaign by imposing unofficial boycotts on South Korean products and enforcing tourism restrictions.
However, the experts predicted that there would be less retaliatory countermeasures.
“It is less eyebrow-raising than joining a security cooperative led by the U.S. So even if Beijing harbors suspicions that Seoul may be slowly adjusting its alignment between the U.S. and China, we would expect less retaliatory countermeasures from Beijing because this is a less overt decision,” Soo Kim said.
“We will have to wait and see how the Yoon administration continues to sketch out its foreign policy, but the administration appears to be well-aware of the consequences such decisions may bring to Seoul-Beijing relations.”
Manning also doubts that China would react to the IPEF participation in a similar way to its economic coercion in response to THAAD deployments.
“Other than an ill-advised exclusion of China from IPEF, there is little in it that specifically harms China ― other than a perception that the U.S. is trying to isolate and contain Beijing,” he said.
Kim Tae-hyo, the first deputy director of the National Security Office, said, Wednesday, the government is in talks with the Chinese side over a follow-up agreement to the Korea-China free trade agreement (FTA).
“The Yoon administration unveiled its plan to update its FTA with China and it means the two nations will increase their trades, including chips, rather than Korea decoupling from China,” Kim Yeoul-soo said.
Manning suggested that the Yoon administration urge the U.S. to invite China to participate in the IPEF, which would be helpful to Korea-China ties.
“China as well as the U.S. needs to play a role in shaping global rules so we can avoid a fragmented, conflict-prone international system,” he said.