Seoul, Washington, Tokyo to bolster cooperation in supply chains, new tech, financial stability

President Yoon Suk Yeol, U.S. President Joe Biden and Japanese Prime Minister Fumio Kishida arrive for a joint press conference after their summit at Camp David in Maryland, Friday (local time). EPA-Yonhap

By Nam Hyun-woo

• Published Aug 19, 2023 7:03 AM KST
• Updated Aug 20, 2023 3:15 PM KST

Supply chain disruption warning system, 3-way finance ministerial meeting to be launched

By Nam Hyun-woo

South Korea, the United States and Japan agreed to form a tight-knit economic cooperation framework during a trilateral summit between their leaders at Camp David, the U.S. presidential retreat in Maryland, Friday (local time), as they believe the three-way partnership can create a synergy to strengthen economic security.

During a press conference after the summit, the leaders of the three countries promised to strengthen trilateral economic cooperation by employing measures in various sectors of their economies.

In the joint statement, titled the Spirit of Camp David, the leaders promised to “maintain focus on building robust cooperation in the economic security and technology spheres, leveraging the unique capabilities that each of our countries brings to bear.”

In doing so, the leaders acknowledged the importance of deepening their Trilateral Economic Security Dialogue and decided to launch pilot projects for an early warning system to expand information sharing and enhance policy coordination on possible disruptions to global supply chains.

“In the field of economic security directly linked to the economies of the three countries, we will work to expand our strategic partnership,” Yoon said. ”To ensure global supply chain resilience and energy security, we pledged to bolster our trilateral cooperation to manage global supply chain risks, and an early warning system will be established together.”

The early warning system will be aimed at setting up a mechanism for the timely exchange of information regarding supply chain disruptions and to facilitate joint responses by integrating early warning systems at the overseas diplomatic missions of the three countries.

Initially, Seoul and Washington were attempting to set up an early warning system, but the leaders decided to expand it into a trilateral structure that also includes Japan to jointly address challenges that may impact supply chain stability.

According to Seoul's presidential office, discussions at the Trilateral Economic Security Dialogues will determine further details such as major mission locations for the system.

“The early warning system will begin by identifying key supply chain partner nations in key items such as semiconductors and rare minerals and a regular consultation process will be initiated among the three countries' overseas diplomatic missions in these identified nations,” said senior presidential secretary for economic affairs Choi Sang-mok.

“This process will involve the exchange of information regarding the countries' policy trends, potential disruptions in supply chains and the corresponding response strategies for critical items,” Choi added.

The three countries will also launch projects for the joint development of critical and emerging technologies, such as advanced semiconductors, supercomputing, quantum and artificial intelligence. The countries will raise $6 million (8.03 billion won) in research funds and have an expert meeting next month to identify the subjects of the joint projects.

Along with developing new technologies, the leaders noted the importance of protecting them from being illegally exported or stolen.

To this end, the countries will begin inaugural exchanges between the U.S. Disruptive Technology Strike Force and the counterparts of South Korea and Japan to deepen information-sharing and coordination across the enforcement agencies. South Korea's Ministry of Justice and the Ministry of Trade, Industry and Energy will participate in the inaugural meeting.

“One of our top interests is cooperation with the Disruptive Technology Strike Force,” presidential secretary for economic security Wang Yoon-jong said.

“We have been engaging this, as we see it as an opportunity to benchmark and learn from the strategies used by the strike force to counteract increasingly sophisticated attempts at intellectual property theft.”

Biden also said the three countries will enhance cooperation between their development finance institutions “to mobilize more financing for quality infrastructure, and secure communications technology to help low-income and middle-income countries throughout the region take on the challenges that matter most to their people.”

To improve financial stability, the leaders decided to launch a trilateral finance ministers' meeting to discuss cooperation in stabilizing their financial and foreign currency markets, which will contribute to investments and exchanges between the countries. Depending on further discussions, meetings can be take place on a regular basis like other trilateral ministerial talks that the leaders agreed to hold annually.

One remaining question is whether the three countries' enhanced economic partnership can translate into actual benefits for South Koreans, because China is still Korea's biggest economic partner, while Friday's agreements showcase South Korea's preference for the U.S. over China when it comes to economic policies.

Seoul's presidential office and Biden himself stressed that the new agreements do not target a certain country, but seek to strengthen supply chain stability and the resilience of the three countries. However, the measures are widely accepted as the countries' attempt to mitigate China's economic influence.

In the joint statement, the leaders pledged to launch the supply chain early warning system to “confront and overcome economic coercion” and stated that the countries will “continue to strengthen trilateral cooperation on export controls to prevent our technologies from being diverted for military or dual-use capabilities.”

“Yoon is making a clear and decisive preference for the U.S. over China in both security and economic aspects, including semiconductors. Given South Korea's deeply partisan politics, Yoon's decision will undoubtedly attract scrutiny from his critics,” said Lee Seong-hyon, a senior fellow at George H. W. Bush Foundation for U.S.-China Relations.

“Therefore, although Yoon made this bold diplomatic move, delivering positive economic outcomes would be a crucial step for Yoon to secure support for his foreign policy,” Lee added.

“There can be multiple factors that impact the supply chain, such as the COVID-19 pandemic or other economic security issues,” Choi, the senior presidential secretary for economic affairs, said, when asked if the early warning system is targeting China.

“Establishing collaboration among the three countries offers a more comprehensive assurance of supply chain stability compared to bilateral cooperation. This will enable enhanced stability for our companies and businesses,” he added.