Korea can play role in easing Sino-US tensions: WTO chief

The Korea Times

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Sun, October 1, 2023 | 21:22

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Korea can play role in easing Sino-US tensions: WTO chief

Posted : 2023-05-25 09:55

Updated : 2023-05-25 10:04

World Trade Organization Director-General Ngozi Okonjo-Iweala speaks during an interview with Yonhap News Agency in Seoul, May 23. Yonhap

Korea can play a key role in managing tensions from the intensifying rivalry between the United States and China, as it maintains good relations with both sides and its exports-driven economic growth best represents the virtue of the multilateral mechanism, the chief of the World Trade Organization (WTO) has said.

The U.S. has been pushing to curb China's access to advanced technologies, such as in the field of semiconductors, by strengthening relations with allies and partners and implementing regulations. China has also taken similar steps, causing concerns about negative impacts of such "friendshoring" on the global supply chains and growth potential.

"As a champion and a global poster child for trade, I think Korea stands in a very good position where it has friendly relations, relatively friendly with both sides." WTO Director-General Ngozi Okonjo-Iweala said in an exclusive interview with Yonhap News Agency in Seoul on Tuesday. "Korea can use that position to talk to both sides and help to make sure that the tensions do not overflow. Korea can actually be helpful."

She visited Korea for a three-day stay from Monday to drum up support for the multilateral trading system and various reform efforts by her organization.

In her keynote speech during a forum in Seoul on Tuesday, the WTO chief said friendshoring practices will not only undermine global trade but could incur enormous economic costs, noting that countries will see their gross domestic product (GDP) shrink if the world economy splits into two trade blocs.

Export is a key growth engine for Korea, and China is its No. 1 trading partner after the U.S.

"The WTO provides one forum where China and the U.S. can talk to each other and talk about the problems they have. This is why multilateralism is important. Even when there are geopolitical tensions between members, they must have a place where they can still talk to each other," the chief said.

Asked about the U.S.' Inflation Reduction Act (IRA), Okonjo-Iweala stressed the need for any policy measures to be conducive in line with WTO principles.

"We have no problems with the policies. All that we say is that in trying to enact these policies, try to do so in a way that is also conducive to other members and does not really discriminate against other members," the official said.

"Korea has approached the United States to discuss how Korea is being impacted by the IRA. I understand they've had very good relations because there's an FTA between Korea and the United States, and Korea is now able to benefit to be part of those decisions. So have a dialogue. We encourage members to have dialogues to try to solve any problems," she added.

Ngozi Okonjo-Iweala, the director general of the World Trade Organization / Yonhap

The IRA gives up to $7,500 in tax credits to buyers of EVs assembled only in North America, raising concerns that Hyundai Motor and its smaller affiliate Kia could lose ground in the U.S. market, as they make EVs at domestic plants for export to the U.S.

Okonjo-Iweala, meanwhile, welcomed a recent thaw in the diplomatic and economic relations between Korea and Japan, particularly given that the two nations are "powerhouses in trade."

"Japan is a country that is one of the biggest trade nations in the world. So is Korea. Both of them coming together can only be good for world trade. We strongly support that," she said.

In March, Korea completed procedures to drop a complaint it filed with the WTO against Japan over Tokyo's trade curbs, as the two sides vowed efforts to improve bilateral ties following Seoul's announcement to compensate victims of Japan's wartime forced labor without asking Japan for contributions.

Last month, the Seoul government put Japan back on its "white list" of trusted trade partners, and Japan began domestic procedures for the same measure for Korea.

Speaking of the global economy, the WTO chief voiced optimism about effects of China's recent reopening of its border.

"We foresee a global economic slowdown, and we are even worried about the long-term growth potential of the global economy," she said, noting that global trade is forecast to grow 1.7 percent this year, far lower than 2.6 percent growth per year on average over the past decade.

"But we saw a slight uptick in the global economic forecast, and part of that is due to the effects of China reopening. It, I think, is positive in many ways because it helps to spur external demand for certain markets. It is good for China to play its role as one of the engines of global growth," she added. (Yonhap)

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