The author is president of the Lee & Ko Global Commerce Institute and former Minister of Commerce.
The cross-border movement of data has become as important as the trade in goods and services in the context of accelerating digitization. With growing concern about the possibility of climate change, reducing carbon emissions will also affect business activities for trade, investment and finance. Confusion has been unavoidable for some time due to a lack of multinational rules on digital trade and environmental commitments.
The tension between the United States and China continues to escalate and affects trade, security and technology. The conflict escalated after the United States renewed its criticism of China’s forced labor and other human rights issues. Key markets and countries are set to come under pressure as America and China take their side on global supply chains and orders.
Due to the slow recovery of threats from variants of the coronavirus, many countries are resorting to protectionist policies. The World Trade Organization (WTO) has become dysfunctional despite the threat to the global trading order. Global trade is expected to become more volatile and uncertain due to a complex web of interests in security, technology, environment, human rights and health.
Korea managed to achieve record trade despite Covid-19 setbacks. The country became the eighth largest trading power in the world with a trade turnover of $1.26 trillion and exports ranked seventh with $640 billion. Last year, the International Monetary Fund (IMF) officially identified Korea as the 10th largest economy in terms of gross domestic product (GDP). Korea became a G10 country in half a century after being one of the poorest in Asia in the 1960s.
But the country faces multiple challenges related to declining growth potential, a low birth rate and rapid ageing, a weak social protection system and widening income disparities. To become a permanent member in the category of developed countries, Korea must sustain economic growth. Korea must inevitably focus on external fronts – such as exports, overseas investment and foreign investment – due to the lack of natural resources and the narrowness of the domestic market.
The global trading environment will only get tougher. The conflict between the United States and China is a huge burden for Korea, as the world’s two largest economies are its major trading partners. Now that Korea has become a G10 country, it needs to approach the global trading environment with more maturity. Seoul must make it clear that it upholds a non-discriminatory and mutually respectful multilateral order based on the principles of free democracy and market capitalism. Korea should become a core trading nation with influence in global society by pursuing a trade policy based on universal values and putting national interests first.
Korea needs to adopt some fundamental approaches to achieve these goals. Since the country has benefited from the multilateral framework, it should do its best to strengthen the multilateral order led by the WTO. It should be proactive in accepting new social values such as the protection of the environment and the strengthening of human rights and contribute to the development of relevant trade rules. It must propose micro-policies to help national industries struggling with liberalization and globalization.
Korea should also be consistent in its approaches to the United States and China. It must diversify trade relations that are too centered on America, China and Southeast Asia. The country must do more to help developing countries with its know-how in industrialization and modernization.
International trade is crucial for Korea’s sustainable growth. The country needs to develop comprehensive and far-sighted strategies to respond to complex business environments. He must hone his diplomatic skills to effectively coordinate the differing views of government offices on the trade front. Korea’s current trade negotiating function is ill-suited to a world No. 8 trading power – and falls short when compared to its major trading partners.
The government should consider setting up a separate trade representative office or upgrading it. It’s hard to say which option is better. The trade representative should be at the ministerial level.
Translation by Korea JoongAng Daily staff.