Passing the foreign policy baton

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Passing the foreign policy baton

While foreign policy has not been a driving force in the presidential election, it will always loom as a significant issue for any Korean president. As a country dependent on foreign markets and resources for its own economic livelihood, Korea cannot be indifferent to the changes taking place beyond its borders and the impact they have on its economic prosperity and national security. In the past five years, we have seen momentous international upheaval. The 2008 financial crisis, the Arab Spring and the euro zone crisis have all had a direct impact on Korea’s economy.

Once the next president takes office, the potential for policy changes across a range of issues will be grounded in how successfully Korea is able to navigate these and other external constraints, meaning that there is a significant chance that international issues will consume a considerable amount of the next president’s attention. Given the importance of international events, the following is a look at potential foreign policy issues the next administration is likely to face.

Trade is the lifeblood of the Korean economy. When the international economy weakens, so does the domestic economy. Over much of the past decade, conservative and progressive administrations have developed a fairly robust bilateral free trade agreement agenda. However, Korea is likely approaching the end of any new bilateral agreements once the talks with China are finalized.

Moving forward, Korea will likely turn to regional trade agreements. There are two competing visions for advancing trade in Asia and shaping future rules of the road - the Trans-Pacific Partnership and an Asean-centered agreement. While both visions share similarities, one is founded on the principal of an Asia-Pacific free trade area while the other focuses exclusively on free trade within Asia. These and other differences will require the next administration to outline Korea’s vision for trade in the region and ensure that any final agreement does not disadvantage Korea.

Because of Korea’s dependence on the outside world for resources, the Middle East has become an important source of energy. At the same time, the Arab Spring and the standoff over Iran’s nuclear program have increased uncertainty in the region. These changes present both challenges and opportunities for Korea.

While the Middle East is known as an important source of energy for Korea, it is increasingly becoming an important export market as well. Korea’s exports to the region grew from $7.6 billion in 2002 to $35.9 billion, or 64 percent of Korea’s exports to the United States, in 2011.

Because of Korea’s dependence on the Middle East for energy, peace and stability in the region remains a critical interest. While Korea possesses limited ability to influence the outcome of events in the region, that does not mean it should be a passive observer. Instead, it needs a comprehensive strategy that will enable it to aid in the continuation of stability, balance efforts to sanction Iran over its nuclear program and secure its interests to the highest degree possible.

While there is every reason to be skeptical of North Korea, the change in leadership does present an opportunity to put the regime to the test to see if it is sincere about recent hints at economic reform or if the failed “Leap Day Agreement” better reflects the new regime’s evolving policy positions. With fresh leaders in both Koreas, there will be less baggage from prior interactions and an opportunity for a fresh start.

Rather than embracing an approach of unilateral and unconditional aid, the next administration should design an approach that would strengthen reform tendencies in North Korea and enhance the economy if the regime in Pyongyang embraces genuine reform. At the same time, it should avoid ventures that largely provide revenue to the regime, but do little to engage the wider populace in economic activities.

Two decades after establishing formal relations, ties with China have grown increasingly complex. On the surface, Korea and China have developed a burgeoning trade relationship. China passed the United States in 2003 to become Korea’s largest trading partner and today ranks as Korea’s most important export and import market by a wide margin.

While China will undoubtedly play a key role in the terms of eventual reunification, placing too much emphasis on utilizing ties with China to impact Pyongyang overburdens the relationship on an issue where there is unlikely to be much utility for Seoul and provides Beijing with leverage over other issues of priority for policy makers. Instead, the next administration should focus on trying to diversify its relationship with Beijing beyond bilateral economic ties toward greater regional and global cooperation.

The question is whether to continue or expand Korea’s role in international affairs or to shift back to a more limited focus on Northeast Asia and North Korea. Because every country faces resource constraints, the later course may become an attractive proposition. However, if the next administration chooses to continue a more globally focused role, it will need to focus to a greater extent on the nature of South Korea’s role in international affairs. It may expand its official development assistance and efforts to help nations learn from Korea’s own developmental experiences through the Knowledge Sharing Program, work through the Group of 20 in a bridging role on global economic issues or look to further develop a role in green growth policies.

* The author is the Council on Foreign Relations international affairs fellow in South Korea, sponsored by the Asan Institute for Policy Studies. This piece was adapted from a longer issue brief for the Asan Institute.

by Troy Stangarone
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