How to become a major trader

Bark Tae-ho
The author is the president of Lee & Ko Global Commerce Institute and former minister of trade.

Cross-border data movement has become as important as trade of goods and services amid the acceleration of digitalization. With increased concern about the possibility of climate change, reduction in carbon emissions will also affect corporate activities for trade, investment and financing. Confusion is inevitable for some time due to a lack of multinational rules on digital trade and environmental commitments.

Tension between the United States and China is ever-deepening and affecting trade, security and technology. Conflict sharpened after the United States renewed criticism over China’s forced labor and other human rights issue. Key markets and countries are expected to come under pressure as America and China take their sides on the global supply chains and order.

Due to the slowed recovery from threats from coronavirus variants, many countries are resorting to protectionist policies. The World Trade Organization (WTO) has become dysfunctional despite the threat to global trade order. Global commerce is expected to become more unstable and uncertain due to a complicated web of interests in security, technology, environment, human rights and health issues.

Korea managed to achieve record trade in spite of Covid-19 setbacks. The country became the world’s eighth largest trade powerhouse with trade turnover at $1.26 trillion and exports were seventh largest at $640 billion. The International Monetary Fund (IMF) last year officially identified Korea as the 10th largest economy in terms of gross domestic product (GDP). Korea has become a G10 country over half a century from one of the poorest in Asia in the 1960s.

But the country faces multiple challenges from waning growth potential, a low birth rate and fast aging, a weak welfare system and deepening income disparities. To become a permanent member in the developed category, Korea must sustain economic growth. Korea inevitably must focus on external fronts — such as exports, overseas investment and foreign investment — due the lack of natural resources and the small domestic market.

The global trade environment will only toughen. The conflict between the U.S. and China poses a huge burden on Korea as the world’s two largest economies are its biggest trade partners. Now that Korea has become a G10 country, it must address the global trade environment with more maturity. Seoul must make it clear that it abides by non-discriminative and mutually-respective multilateral order based on free democracy and market capitalism principles. Korea must become a core trade nation with influence over global society by pursuing trade policy based on the universal values as well as prioritizing national interests.

Korea must take some fundamental approaches to achieve such goals. Since the country has benefited from the multilateral framework, it must do its best to strengthen the WTO-led multilateral order. It should be proactive in accepting new social values such as environmental protection and human rights enhancement and help draw up relevant trade rules. It must offer micro-policies to aid domestic industries struggling with liberalization and globalization.

Korea also should be consistent in its approaches toward the U.S. and China. It must diversify trade relationships that have been overly centered on America, China and Southeast Asia. The country must do more to help developing countries with its know-how on industrialization and modernization.

International trade is very crucial for Korea’s sustainable growth. The country must draw up comprehensive and farsighted strategies to respond to complicated trade environments. It must hone diplomatic capabilities to efficiently coordinate differing views of government offices on the trade front. Korea’s current trade negotiating function is hardly fit for a global No. 8 trade power — and lacking compared to its major trading partners.

The government must consider installing a separate trade representative office or upgrading it. It is hard to say which option is better. The trade representative should be at the ministerial level.
Translation by the Korea JoongAng Daily staff.