Choosing sides

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Choosing sides

The United States and China are becoming increasingly blunt in asking Korea to take sides in the high-stakes battle over Huawei Technologies. U.S. Ambassador to Korea Harry Harris attending an IT conference in Seoul issued a warning about the “long-term risk” for Korean companies if they choose an “unreliable supplier,” with obvious reference to Huawei. It is the first time a U.S. government official has publicly called for Korean companies to join its sanctions on the world’s largest network gear and second largest smartphone maker. The comment came after the Chinese foreign ministry issued a statement demanding Korea make a “prudent judgment” on actions related to Huawei. Regardless of the outright audacity of the U.S. envoy pressuring the Korean government and the country’s private enterprises, Korea must face the moment of truth whether it likes it or not.

Most traditional allies — Japan and the United Kingdom — have joined the U.S.-led anti-Huawei campaign. But Korea, with heavy reliance on China and Huawei, cannot easily jump on the bandwagon. While Korea’s purchase of network equipment from Huawei reached 500 billion won ($424 million) last year, the Chinese company purchased $10.65 billion worth of Korean components. Severed ties with Huawei could devastate LG U+, which powers its 5G network on Huawei, as well as chipmakers Samsung Electronics and SK Hynix, as Huawei is a major customer for both.

Korean enterprises remember how ruthless Beijing can be, having experienced the retaliatory attacks following the installation of the U.S.-led terminal high altitude area defense (Thaad) antimissile system. Lotte Mart had to withdraw entirely from China after the grocery chain suffered administrative punishment and faced a consumer boycott because its parent group provided a location to host the antimissile system. Korea suffered over 16 trillion won in losses from a 7 percent cut in exports to China and 60 percent plunge in tourists from China. Any retaliation against Korean component companies, which have shipped trillions of won worth of components to China, could spell doom for Korea’s IT companies.

The Trump administration puts economy on the same page with security and the alliance. Korea must muster all its diplomatic wisdom and capabilities to minimize the damage and maximize national interest. Seoul should have taken precautionary steps on behalf of Korean companies based on the tradition of trust with Washington to avoid outright pressure to choose sides.

But we so far see little effort from the government. It does not seem to have the confidence of Washington or Beijing. The National Security Board meeting held right after the U.S. blacklisting of Huawei entirely focused on inter-Korean issues. Even as the trade war has spilled over to Korea, the Blue House and government are preoccupied with aid to North Korea. It is no wonder Korea companies ask for whom the government exists.

JoongAng Ilbo, June 7, Page 30
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