Economic Nationalism

Seoul Ought to Turn Trade Crisis Into Opportunity

Putting words into corresponding actions is difficult for individuals and countries alike, and much more so in times of crisis, such as now.

One can reaffirm this hackneyed but time-tested phrase, given how major governments of the world are acting to cope with the worst economic setback since the 1930s. The latest case in point was the meeting of the Group of Seven industrialized democracies in Rome last week.

U.S. Treasury Secretary Tim Geithner conveyed President Barack Obama's ``deep commitment'' to sustaining free trade policies ― just days after the U.S. Congress decided on the obligatory use of domestic steel products in projects funded by stimulus spending.

The fact that the so-called Buy-American provision has been somewhat eased from its original version and the U.S. administration has mostly tried to discourage its legislature's protectionist appetite will provide little comfort to trade partners until Obama makes clear his intention to veto the bill, the outlook for which should be said as mixed at best for now.

Little wonder the U.S. move has endorsed and triggered protectionist fervor elsewhere, ranging from France's demands for using home-made auto parts to Britain's depreciation of sterling.

Korea is certain to be hit hardest by this resurgence of economic nationalism, not just because it is one of the countries most heavily dependent on foreign trade for growth but because Seoul belongs to a group of countries whose economies are contracting the fastest. It's difficult to understand in this regard why Korea, the second-largest steel exporter to America, has yet to join China and India in criticizing U.S. protectionism in the steel trade.

It may be because Korean products will be relatively less affected by the U.S. move or because the bilateral trade ties, as shown by the Korea-U.S. Free Trade Agreement, keeps Seoul from joining multilateral U.S. bashing. But the government should look far more broadly and deeply than that.

Whatever the reason, Seoul's silence will likely do more harm than good to its long-term strategy, as the nation should take the lead in global anti-protectionist campaigns as the bridge between industrialized and industrializing countries, and as a co-chairing country in the Group of 20 summit in London in April. Washington should understand Seoul's position, especially given the agreement on taking a joint stance against protectionism made over the phone between Presidents Lee and Obama earlier this month.

It's time for Korea, one of the biggest beneficiaries of free and open trade, to come forth as its greatest preacher and practitioner at a time when most countries, particularly the hitherto leaders of industrial countries, seem to be backing off somewhat.

This is no easy course of action for the world's 13th largest economy and its 11th largest trader to maintain in the future unless the nation readies itself to back up its diplomatic initiatives with enhanced competitiveness of the domestic industries, such as by diversifying export markets, heightening added value of core products, increasing spending on R&D activities and cultivating quality manpower.

President Lee has always called for turning crisis into opportunities. Unless his government is ready and able to follow up on the presidential slogan, however, it will end up as just another disconnect between words and actions.