Kowtowing to TrumpU.S. President-elect Donald Trump is persistently flexing his muscles to create new jobs in the United States. Starting with U.S. air-conditioner maker Carrier, he has also put a damper on attempts by Ford, General Motors and Fiat Chrysler to build or expand plants in Mexico. Foreign companies are not excepted. After Trump threatened to levy a 35 percent “border tax” on cars manufactured in Mexico for U.S. export, the world’s No. 1 automaker Toyota had to promise Trump it would invest $10 billion in the U.S. over the next five years.
Hyundai Motor joined the move Tuesday by announcing a $3.1 billion investment plan for the U.S. Following similar investment pledges by Samsung and LG Electronics, Korean companies are jumping on the bandwagon. Alibaba, Softbank, Walmart and Bayer also came up with plans to create new jobs or invest in research and development in America. The tycoon-turned-president-elect celebrated the victory in the battle for jobs after calling it “big stuff.”
But such a situation poses dangers to Korea, which has prospered thanks to free trade, as Trump is threatening to impose penalties in the form of a border tax on foreign companies and pressuring them not to build plants outside America. Trump’s protectionism could easily lead to a global trade war if the U.S.’s trading partners are not allowed to sell their products in America unless they manufacture them there.
Trump’s feat heralds tough challenges for Korea. For Hyundai, it does not mind directly investing in the U.S. because it can avoid labor union demands at home for wage hikes. But the problem is a critical loss of local jobs. Korea has lost 50,000 jobs after the automaker started building plants overseas over the last two decades.
Our presidential contenders are turning a blind eye to these harsh new realities. Moon Jae-in, former leader of the opposition Democratic Party and the frontrunner in polls, vowed to create new jobs in the public sector, but that cannot solve the problem fundamentally because his commitment, if implemented, would only raise inefficiency in the sector. Former UN Secretary-general Ban Ki-moon, a presidential hopeful, promised to reinforce internship programs, but was immediately criticized for not increasing full-time workers first.
Korea is built on an export-driven economy. The key to tackling the challenge is strengthening high-tech industries and developing our services industry which can create more jobs. Presidential wannabes must keep that in mind.
JoongAng Ilbo, Jan. 19, Page 34