ED US-China trade deal

South Korea needs to seize opportunity to boost economy

It is good news that the United States and China have reached a truce in their trade war to avoid its devastating effects on the world's two largest economies and other countries across the globe. Washington and Beijing announced a “phase one” agreement Friday that will lower some U.S. tariffs in return for more Chinese purchases of American agricultural products and other goods.

At the core of the deal is a U.S. agreement to reduce tariffs on some Chinese goods and indefinitely put off 15 percent tariffs on $160 billion in consumer goods that were due to take effect Sunday. China, for its part, has agreed to buy $50 billion in U.S. agricultural goods a year. Beijing has also agreed to suspend retaliatory tariffs imposed on U.S. products.

It is fortunate that the two sides have found a compromise to put the trade war on hold. However, the dispute has yet to find a permanent solution. That is why the deal is called a truce. It means the trade row could flare again in the process of implementing the agreement. The U.S. and China have a long way to go before ending the trade war. They still face many thorny issues related to intellectual property protection, forced technology transfer and nontariff barriers such as state subsidies.

South Korea is hopeful that the U.S.-China trade deal will have a positive effect on its efforts to boost its exports to the G2 economies, which account for about 40 percent of the nation’s overseas shipments. The country has taken the brunt of U.S. President Donald Trump’s trade protectionism and his trade war with China. Now the deal is expected to clear many of the uncertainties that have clouded the global economy.

It is imperative for the Moon Jae-in administration to use the truce in the U.S.-China trade row as an opportunity to reverse exports' downward spiral and turn around the sagging economy. At the same time, the government should work more closely with businesses to reduce the country's undue reliance on the U.S. and China and diversify its export markets.

Most of all, the authorities must double down on promoting deregulation, innovation and structural economic reform to improve the competitiveness of Korea Inc.