[Korea Times Forum] Korea advised to find opportunities amid challenging US trade policies
Korea advised to find
opportunities amid challenging US trade policies
Stronger Korea-US ties key to
tackling supply chain crisis
By Park Jae-hyuk, The Korea
Times - Two international relations professors and a lawyer specializing in
economic sanctions urged the Korean government and conglomerates here to
upgrade their ties with U.S. partners, so as to maximize benefits from the
recent U.S. trade policies that intend to revitalize the American manufacturing
industry by restraining the growth of Chinese firms.
During the 2022 Korea Times
Forum titled, "New Challenges for Korea-U.S. Alliance," Wednesday,
the three panelists for the forum's first session on economic security agreed
that the two countries' bilateral cooperation will make it possible for both of
them to overcome difficulties stemming from the growing uncertainties in the
global business environment.
American Chamber of Commerce in
Korea (AMCHAM) Chairman & CEO James Kim, who moderated the panel discussion, also
preferred the word, "opportunity," over "challenge," saying
he believes in new opportunities for the two countries' alliance.
In this regard, the
participants shared the view that it is natural for Samsung Electronics,
Hyundai Motor and various other Korean companies to make large-scale
investments in the U.S. amid the recent supply chain disruptions.
"It is highly important to
build a supply chain where there is a demand," said Lee Seung-joo, a
professor in Chung-Ang University's Department of Political Science and
International Relations, refuting the claim that the Korea-U.S. tech alliance
only benefits the latter. "In terms of diversification, it may be a good
strategy for Korean companies to invest in the U.S., not just in terms of cooperating
with the U.S. government's reshoring policy."
Describing the semiconductor
and automotive industries as "symbols" of the two countries'
bilateral economic ties, Lee advised Korean firms to think about how to
transform production cooperation into tech cooperation with the U.S., so that
they can tap into the world's most innovative technological ecosystem.
Shin Tong-chan, a partner
attorney at one of the nation's major law firms, Yulchon, also saw that both
Korean and U.S. industries will benefit from Korean firms' investments in the
American market. "Samsung Electronics and
Hyundai Motor are already global companies investing in various parts of the
world," the lawyer said. "They have heavily relied on supply chains
in the overseas market. Due to the tensions between China and the U.S.,
however, Korean companies cannot rely on the Chinese market or production
facilities anymore." From that standpoint, he said
it has become inevitable for Korean companies to accept the U.S. request for
friend-shoring, the strategy of building supply chains excluding unfriendly
nations.
Lee Hyo-young, an assistant
professor of international economy, trade and development studies at the government-run
Institute of Foreign Affairs and National Security (IFANS), also regarded
Korean firms' investments in the U.S. market as natural. However, she
attributed their decisions mainly to the U.S. government's higher import
barriers. "We need to consider that
the hollowing out problem can occur in Korea because only large companies can
afford those kinds of large investments in the U.S., while the rest of Korean
companies cannot afford to do that," she said. "There can be many
ways to enhance the technology alliance between the two countries, not only by
inducing more investments in the U.S. but also by engaging in more R&D
cooperation."
The panelists also mentioned
the necessity of the two countries' cooperation to dispel worries among Korean
electric vehicle industry insiders over the U.S. Inflation Reduction Act (IRA).
The Yulchon partner admitted
that Korean companies will suffer difficulties at least in the short term,
although he expects the relocation of their production facilities to the U.S.
from China to enable them to benefit from the new U.S. law in the medium to
long term.
The Chung-Ang University
professor urged the Korean government to continue to make efforts to convince
the U.S. government and Congress to grant exceptions to Korean companies. "It is highly important
for the Korean government to coordinate with other countries with similar
concerns. Korea should not seek its own interests in a very exclusive
manner," he said. "Korea should also weigh carefully the benefits and
costs of the IRA."
The IFANS professor said that
artificially trying to make everything in the U.S. is not a very good strategy
from a business perspective. "I hope that the two
governments will be able to work it out," she said, adding that the
Indo-Pacific Economic Framework for Prosperity (IPEF) could help coordinate
Korea's strategic position.
Cooperation in semiconductors
Lee from the IFANS also
emphasized that what happens with the IRA will decide whether or not Korea will
participate in the Chip 4 alliance along with the U.S., Japan and Taiwan.
The two other panelists called
for Samsung Electronics to seek international cooperation in order to manage
its competition with TSMC in the global semiconductor foundry market, which has
intensified as a result of recent U.S. support for the Taiwanese chipmaker amid
the lingering trade war between Washington and Beijing.
While Lee from Chung-Ang
University recognized TSMC for its rapid expansion in the U.S., Japan and
Germany to deal with the geopolitical risks, Shin from Yulchon pointed out that
Samsung Electronics lacks board members of foreign nationality, unlike TSMC,
which has four board members from the U.S. and Europe.
Regarding the labor shortage in
Korea's semiconductor industry, the IFANS professor advised the government to
upgrade its plans to nurture semiconductor experts, so as to prevent them from
moving to other countries.
The Yulchon partner urged the
government to lift unreasonable regulations and give more autonomy to
universities. The Chung-Ang University professor called for balanced and
integrated approaches, while asking businesses to rethink their in-house
training programs.
The AMCHAM Chairman & CEO suggested
that the Korean government lower its regulatory hurdles, so that the nation's
businesses can also look for talented foreign professionals and hire the best
employees for them.
During the panel discussion,
the participants also talked about the potential impact of the Russia-Ukraine
conflict on the Korean economy.
"Due to the exposure of
South Korean companies to the Russian energy market, many South Korean
companies will face difficulties in going through this situation," Shin
said. "On the other hand, Korea has been actively involved in fixing
supply chain disruptions as well as providing assistance to humanitarian aid and
to the defense industries in (Ukraine's) neighboring NATO countries like
Poland, so in my view, it is a challenge but also an opportunity."
Chung-Ang University's Lee
anticipated that the war would have a limited impact on the Korean economy,
given the country's trade volume with Ukraine and Russia. However, he warned of
energy price hikes and supply chain disruptions.
"Ukraine has some key
materials required to produce semiconductors, such as neon gas," he said.
"In collaboration with the U.S. government, the Korean government should
keep track of any signs of instability in the supply chain."
The IFANS professor expressed
concerns about the possibility of the geopolitical risk having a negative
impact on supply chain resiliency and eventually cutting up supply chains into
blocs based on different values and systems.
Source: www.koreatimes.co.kr/www/tech/2022/10/129_338616.html
2022.10.27
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