Korea should participate in proposed Indo-Pacific Economic Framework

By Robert Atkinson

The Biden administration has launched its Indo-Pacific Economic Framework (IPEF) to increase economic cooperation among Pacific region democratic nations. Korea should be an active participant.

In an effort to bring together democratic, rule-of-law Pacific-rim nations in a new trading bloc, it was clearly a disappointment that the United States did not join the Trans-Pacific Partnership (TPP) trade agreement.

Too much deindustrialization, much of it from unfair and predatory Chinese government practices (such as intellectual property theft, massive subsidization and chronic trade surpluses), made too many Americans, especially in key "swing states" needed for a candidate to win the White House, skeptical of trade expansion.

Since President Donald Trump announced in 2017 that he was pulling out of the TPP, this situation has changed little and it may not change until the United States regains global competitiveness in advanced industries.

Because of the difficulty of making progress on the trade front, the Biden administration has instead focused on efforts that don't involve formal trade deals requiring Congressional approval. The lead initiative is IPEF, a proposal by the administration to lead a cooperative effort of a number of key Asian nations, including South Korea.

The administration has not yet articulated the exact nature of IPEP, but there are a host of areas where robust cooperation between Korea and the United States (and other partners) could make sense.

For example, the U.S. and Korea could establish an IPEF innovation policy experts' group to work on a set of joint innovation issues. Both countries would work to develop common industrial classification standards so that partners can conduct cooperative economic statistics gathering and more accurately assess supply chains. They could cooperate on Open Radio Access Network (ORAN) equipment.

The United States and Korea could align collaborative international development aid/assistance, development finance support, and export credit initiatives to encourage nations to select digital technologies, solutions, and platforms from vendors in like-minded nations.

Both countries could connect centers of excellence and advanced manufacturing firms with their international counterparts to share best practices and to build trade connections.

Both nations could work more closely regarding the free flow of data across borders. One place for cooperation is on government access to data. They could agree that data flows between the two countries would be considered "trusted" as they involve countries that are all committed to international best practices as it relates to government access to data.

In addition, as Korea and the United States pursue national strategies to increase their competitiveness in artificial intelligence, including via digital trade, they could use IPEF to support the development of joint data trusts and other data-sharing models to improve the quality (and the quantity) of the data that is the key input into digital goods, services, and research.

Both nations could also work more closely together on technology standards, where China today is using the weight of the Chinese Communist Party to distort the global standards process.

This cooperation would involve setting a high-level policy forum among the two governments' standards experts (with an appropriate balanced scope given the government's interests and role in standards) on their respective approaches to new and emerging technologies and how best to address associated public policy issues, especially as it relates to the development and application of measurement standards.

This could also involve establishing cybersecurity, cloud services, AI, and critical infrastructure security modules to exchange information and best practices, such as the Cybersecurity Framework of the National Institute of Standards and Technology (NIST)

Some, both in the United States and in potential IPEF partner nations, have expressed some skepticism of the proposal because it does not allow the U.S. government to "sweeten the pot" to encourage other country's participation, such as through measures like tariff reduction.

But that is at best late 20th century thinking. Why is the United States the one that must make concessions to convince other nations to do what is ultimately in their interest? Korea is a strong nation. It can and should stand up for democratic and free trade rights in the region. Achieving the goals of IPEF is good for all democratic nations in the region.

Moreover, many of the potential partnership activities, such as those described above, benefit all the countries that participate. The days are gone, or at least should be gone, when the United States is the one that has to make concessions to get other nations to do the right thing that also benefits them.

I have gotten this far without mentioning the elephant in the room: China. But the reality is that the continued rise of China, especially at the cost of economic growth in the region, will mean a reduction in economic welfare of other regional economies and a limit on freedom.

China is monopsony (virtually controlling the market with its buying power) and it uses that to engage in wolf warrior diplomacy, forced transfer technology for market access and intimidation of companies to follow the Beijing line.

China can do this because it is just too big for other countries or companies to thumb their nose at it. The solution to monopsony is monopoly. In other words, other market players cooperating so they can't be held hostage.

IPEF is a modest step in this direction to have the democratic, market economies of the Asia-Pacific region to work more closely together, not to push back explicitly against Chinese economic and political predation, but to help each other. As such, Korea should be a willing and eager partner.

Robert D. Atkinson (@RobAtkinsonITIF) is president of the Information Technology and Innovation Foundation (ITIF), an independent, nonpartisan research and educational institute focusing on the intersection of technological innovation and public policy.