Saying no to U.S. and China based on universal values

Kim Doo-sik
The author is the managing partner of Shin & Kim LLC and chair of the law firms’ international dispute resolution practice group.

Russia invaded Ukraine on Feb. 24. U.S.-led trade sanctions on Russia will affect Korean exports, and Korean businesses in Russia face severe challenges. This underscores various factors endangering Korea’s economy and its security.

The external environment is undergoing a rapid change. Regrettably, South Korea can no longer rely on the backing of the World Trade Organization (WTO) due to its waning influence over the global trade order. The demands of a powerful country have overruled the multilateral rules. Each country must find its own means for survival and prosperity instead of relying on protection from a global order. Korea Inc. is faced with greater risks and challenges as it no longer can rely solely on globalization, which helped it secure its place in the global supply chain.

The ongoing power struggle between America and China poses another threat to Korea’s economy and its security. Korea can hardly maintain its tightrope strategy between the two powers based on a security alliance with the U.S. and economic cooperation with China. The U.S. has been beckoning Korea to join its attempts to rein in China. In a National Security Strategy released last March, the Biden administration designated China as “the only competitor potentially capable of combining its economic, diplomatic, military, and technological power to mount a sustained challenge to a stable and open international system” and listed priorities to realize and defend its democratic values by uniting the world’s democracies to combat threats to free societies, mainly from Russia and China. The White House listed economic security as a priority in national security and mentioned Australia, Japan and South Korea as key allies in defending common goals.

The U.S.-led Indo-Pacific Economic Framework (IPEF) is part of Washington’s campaign to contain China. In the Indo-Pacific Strategy outlined in February, the Biden administration found China’s coercion and aggression the most acute in the region and vowed to work with allies to strengthen interests and values they share. South Korea has already been invited to join the framework.

China is not happy about the U.S.’s attempts at containment. Last June, China passed the Anti-Foreign Sanctions Law to counter countries who join restrictive measures by the U.S. In an export control white paper issued in December, China criticized the potential abuse of export control measures without directly mentioning the United States. Beijing vowed tit-for-tat export curbs on strategic goods to imply weaponization of raw material supplies.

Korea’s economic and security strategy must first define relationships with U.S. and China. Seoul maintains a security alliance with Washington and trade ties with China. What comes first and how security and economic issues can be separated will be the first challenge.

Platforms in the recent presidential campaign can explain how potential leaders saw the relationship between security and the economy. Ruling Democratic Party (DP) candidate Lee Jae-myung vowed to upgrade the alliance between South Korea and the U.S. to a comprehensive one, while keeping to a “pragmatic” foreign policy prioritizing national interests on economic issues. He said he’d capitalize on the competition between America and China to enhance our national interests. How that strategy might have worked is no longer relevant since he lost. But he pretty much spelled out that he would separate security and economic issues if elected.

Meanwhile, president-elect Yoon Suk-yeol of the conservative People Power Party (PPP) vowed to strengthen the Korea-U.S. alliance to further develop bilateral ties beyond security to a comprehensive strategic alliance encompassing both economic and security affairs. On China, he maintained security affairs must not affect the economic front.

The security alliance with the U.S. is the very foundation of Korea’s economic security. The Korea-U.S. alliance is important not just for the Korean Peninsula but for global peace. Global security and national security cannot be separated. But on economic security, the two must be differentiated in peacetime. In the current geopolitical context, economics inevitably must be addressed in a security perspective. Economic security literally means a security guarantee for the economy.

In this light, South Korea should be discreet in upgrading an alliance to a comprehensive alliance combining economy and security. There are many areas in which Korea and the U.S. can cooperate on the economic front. Supply chain diversification and high-tech development are two. But an economic partnership beyond necessity could help narrow Korea’s economic interests. As seen in the case of Ukraine, the United States and the EU have stood firm on security, but EU member countries differ on economic measures.

The new Korean government taking power on May 10 must do away with strategic ambiguities in external trade policy. South Korea has been taking an equivocal position on trade issues involving China. But such a strategic ambiguity cannot help the country address international economic challenges.

On economic issues, South Korea must not feel it has to choose between the U.S. and China. Instead of setting eyes on a certain country, Korea must choose universal values and principles. It must clearly oppose China or the U.S. if their measures are not compatible with reason and principle. A trade policy purely chasing immediate interests without principles cannot earn respect from anyone and can only end up hurting national interests.

In this respect, Seoul needs to make clear its position on Beijing’s anti-market practices. International society has been critical of China’s state-led anti-market norms such as massive industrial subsidization, overcapacity and coercion on technology transfer. But South Korea has not been assertive on China’s practices. It has been passive in antidumping, countervailing investigations or filing suit with the WTO on unfair trade practices of China.

China’s antimarket practices are an issue of principle. If South Korea keeps mum on principles, it will likely be alienated from the new global trade order. The U.S., the EU, and Japan have been working on institutionalizing a new set of regulations against China’s anti-market practices through a joint declaration. The EU is already employing regulations on state subsidization as a part of the joint action. If South Korea turns a blind eye to China’s unfair practices, it won’t be able to join the realignment in the global trade order.

The U.S.-EU joint statement on a Global Arrangement on Sustainable Steel and Aluminum (GSSA) also targets China’s antimarket practices. In December, the United States agreed to lift heavy duties on EU steel under Section 232 of the Trade Expansion Act and replace them with tariff quotas while working on an arrangement to address oversupply and carbon emissions. In early February, Japan decided to join the GSSA after wrapping up an agreement with the U.S. over Section 232 of the Trade Expansion Act. South Korea needs to join the arrangement to protect the interests of the its steel industry. But the country won’t be invited to the negotiations if it stays vague on Beijing’s anti-market practices.
Translation by the Korea JoongAng Daily staff.