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1. Korea’s Trade Policy Priorities with Latin America: Future Directions

Author:
Sungwoo Hong
Publication Date:
02-2025
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
Despite Latin America’s potential as a trading partner, Korea’s exports to Latin America have continuously decreased over the past 10 years, while imports from Latin America have been increasing. The fact that Korea’s exports to these countries have decreased since the conclusion of FTAs with Chile, Peru, and Colombia suggests that it is time to identify the cause of Korea’s decline in exports to Latin America and seek opportunities to expand exports. One reason for the decline in Korea’s exports to Latin America is the decline in Korean companies' investment in Latin America. The correlation coefficient between Korea’s investment in Latin America and exports is quite high, indicating that the decline in investment since the mid-2010s has had a direct impact on the decline in exports to Latin America. As a short-term trade policy goal to consider, I propose establishing and activating a channel for cooperation between Korea and Latin America. It is possible to establish new dialogue channels and revive existing ones, centered on countries where consultative bodies such as the Resources Cooperation Committee, Senior Policy Council, and Joint Economic Committee have already been established, making this a more cost-effective approach compared to other initiatives As a task to be pursued from a long-term perspective, I propose preparing for the possibility of economic integration between the United States and Central America. Assuming that the conflict between the United States and China will continue in the future, expanding economic integration between the United States and Central America can be positive for Korea in that it can alleviate some of the uncertainty Mexico currently has as a bridgehead targeting the US export market. However, expanding economic integration between the United States and Central America is not only difficult for Korea to directly intervene in, but also requires economic and diplomatic efforts in parallel, meaning it may be difficult to achieve in the short or medium term, and thus needs to be pursued as a long-term task. Central American countries, excluding Nicaragua, may be countries that currently have a demand for increasing the level of economic integration with the United States, and the United States may also consider expanding economic integration with them.
Topic:
Investment, Exports, Trade Policy, and Economic Integration
Political Geography:
Asia, South Korea, and Latin America

2. Alignment or Misalignment? US and EU High-Tech Trade and Sanctions Policies toward China

Author:
Antonio Calcara and Jeffrey J. Schott
Publication Date:
04-2025
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
This Policy Brief focuses on the alignment or misalignment of the European Union and the United States on high-technology trade and sanctions vis-à-vis China. The Trump administration is likely to continue the aggressive US stance toward China in the technological realm, putting increasing pressure on its European allies to align with US policy. The Europeans, for their part, are in a difficult position: On the one hand, they are under pressure from the US government; on the other hand, the more Washington restricts Chinese trade, the more Chinese exporters will look to the European market to sell their manufactured goods. Increased competition from Chinese imports in Europe, especially in the automotive sector, could in turn trigger a political backlash that weakens support for transatlantic coordination on China.
Topic:
Science and Technology, Sanctions, European Union, Trade Policy, and Imports
Political Geography:
China, Asia, United States of America, and European Union

3. Have Dynamic Spillovers and the Connectedness of Trade Policy Uncertainty Changed During the COVID-19 Pandemic and Sino–US Trade Frictions?

Author:
Chien-Chiang Lee and Farzan Yahya
Publication Date:
03-2024
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
In this paper, we examine the spillover and connectedness between the trade policy uncertainty (TPU) of the United States (US), China, Japan, and the Republic of Korea (henceforth, Korea) under global geopolitical risk (GPR), infectious disease equity market volatility (EMVID), and GPR from North Korea (GPRNK) using a relatively novel time-varying parameter vector autoregression (TVP-VAR) approach. Additionally, method of moments quantile regression is utilised to estimate the asymmetric effect of GPR, GPRNK, and EMVID on TPU. Our findings suggest that there is a high total and directional spillover amongst underlying variables during Sino–US trade friction that further elevated during the coronavirus disease (COVID-19) pandemic period. The US is a net receiver of spillover from the TPU of all economies, while the Chinese TPU receives spillover from EMVID. The results further confirm that both the TPU of China (TPUCN) and the TPU of the US (TPUUS) are vulnerable to EMVID, but the effect is stronger for Chinese TPU in the higher quantiles. Although Japanese TPU is less vulnerable to GPR and EMVID, it is significantly exposed to GPRNK. Korean trade shows resiliency and immunity to pandemic-induced volatility and GPRNK.
Topic:
Trade Wars, Trade Policy, COVID-19, and Spillovers
Political Geography:
Japan, China, Asia, South Korea, and United States of America

4. Export Controls Game: Rethinking Global Integration

Author:
Sangjun Yea
Publication Date:
07-2024
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The article discusses how geopolitical interests are influencing trade policies and global supply chains, leading to a reevaluation of international relationships. The U.S. and China are specifically highlighted, with the U.S. implementing export controls on semiconductors to prevent China's military advancement, while China responds with its own export restrictions on essential raw materials. Using a game-theoretic model, the study illustrates how countries use export control measures to balance security interests and economic benefits, ultimately impacting the global semiconductor supply chain and production decisions of multinational corporations.
Topic:
Exports, Trade Policy, Economic Integration, Supply Chains, and Semiconductors
Political Geography:
China, Asia, North America, and United States of America

5. The International Economic Implications of a Second Trump Presidency

Author:
Warwick McKibbin, Megan Hogan, and Marcus Noland
Publication Date:
09-2024
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The paper explores policies promoted by former president and now candidate Donald Trump that would potentially affect the global economy. We focus on immigration policy, trade, and erosion of the Federal Reserve Board’s political independence. Each policy has differing macroeconomic and sectoral impacts on the United States and other countries. We find, however, that all the policies examined cause a decline in US production and employment, especially in trade-exposed sectors such as manufacturing and agriculture, as well as higher US inflation. The trade policies do little to improve the US trade balance; however, the erosion of Fed independence does so by causing capital outflows, a significant depreciation of the dollar, and higher unemployment toward the end of 2028, which worsen American living standards. Scenarios combining individual policies show that the changes cause a large inflationary impulse and a significant loss of employment (particularly in manufacturing and agriculture) in the US economy. The negative impact of a contraction in global trade is significant for countries that trade with the United States the most. The adverse effect is offset for some economies by the positive effects of an inflow of foreign capital that would otherwise have gone into the US economy. An online dashboard contains a full set of macroeconomic and sectoral results for all countries.
Topic:
Migration, Central Bank, Trade Policy, Donald Trump, and Deportation
Political Geography:
China and Asia

6. Despite disruptions, US-China trade is likely to grow

Author:
Megan Hogan and Gary Clyde Hufbauer
Publication Date:
10-2023
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The United States and China hit record trade levels in 2022, despite a prickly relationship, suggesting that calls for severe or even total economic decoupling between the world’s two economic superpowers may be ill-advised, say Hogan and Hufbauer. The dollar value of US-China trade grew significantly between 2019 and 2022, notwithstanding declines in trade flows of certain products such as semiconductors and aircraft due to the trade war. The persistence and even growth of the two countries’ total trade despite political and economic disputes reflects the mutual benefit that private firms see in this commercial relationship. The authors conclude that partial decoupling between the United States and China has not, so far, redrawn the world trade map. Nor does it seem likely to do so on an aggregate trade basis between now and 2025.
Topic:
Foreign Policy, Bilateral Relations, Trade Policy, and Semiconductors
Political Geography:
China, Asia, North America, and United States of America

7. The Challenges of Adapting Trade Policies to the Digital Era

Author:
Kyu Yub Lee, Won Seok Choi, Ji Hyun Park, Min Ji Kang, and Unjung Whang
Publication Date:
01-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This study provides evidence on barriers to digital trade and the economic effect of digital trade, based on surveys of domestic firms in Korea and data collected from random sampling. After briefly examining the prospects of e-commerce talks at the WTO and characterizing digital trade rules at the FTA level, the study concludes by providing suggestions for major policy tasks and mid- to long-term directions of Korea’s digital trade policy.
Topic:
Digital Economy, Trade Policy, and WTO
Political Geography:
Asia and South Korea

8. Analysis of U.S. International Economic Policies and its Implications

Author:
Gu Sang Kang
Publication Date:
05-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This study analyzes and evaluates the impact of foreign economic policies implemented during the Trump administration's four-year tenure, and aims to predict the direction of international economic policies under the Biden administration launched following the 2020 presidential election. The former President Trump put 'America First' as the slogan of economic policies and imposed import restrictions and tariffs on trading partners based on Sections 201, 232, and 301 of the U.S. trade acts. In addition, the Trump administration strongly promoted renegotiation, claiming that some existing trade agreements had been concluded unfavorably to the U.S. Furthermore, the Trump administration promoted the standardization of digital trade rules and the expansion of digital taxation in order to support the expansion of digital trade. Through the empirical analysis, we find that the Trump administration's tariff measures had a somewhat positive effect on the U.S. industrial employment, but it is difficult to say that the policy effect that President Trump initially expected was achieved as the measures also had a negative effect on industrial production. Moreover, we find that the tax reform had only a short-term effect in reducing the U.S. direct investment to foreign countries. Like the Trump administration, the Biden administration's international economic policy directions are showing strong protectionist perspectives such as maintaining tariffs on Chinese imports and reorganization of the global supply chains centered on the U.S. Based on our analysis, there are three policy implications. First, it is necessary to strengthen digital trade cooperation with middle power countries participating in the WTO e-commerce negotiations along with a detailed analysis and review of the economic impacts. Second, Korea needs to take advantage of the benefits provided by the U.S. federal government and strengthen cooperation in the supply chain based on norms with the U.S. Finally, Korea needs to reach an amicable agreement with the U.S. on trade remedies that have already been applied by raising the need to strengthen its supply chain with the U.S.
Topic:
Foreign Policy, Digital Economy, Economic Policy, Trade Policy, Donald Trump, Industry, Protectionism, and Joe Biden
Political Geography:
Asia, South Korea, North America, and United States of America

9. The US–China trade war and phase one agreement

Author:
Chad P. Bown
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The Trump administration changed US trade policy toward China in ways that will take years for researchers to sort out. This paper makes four specific contributions to that research agenda. First, it carefully marks the timing, definitions, and scale of the products subject to the tariff changes affecting US-China trade from January 20, 2017 through January 20, 2021. One result is that each country increased its average duty on imports from the other to rates of roughly 20 percent, with the new tariffs and counter-tariffs covering more than 50 percent of bilateral trade. Second, the paper highlights two additional channels through which bilateral tariffs changed during this period: product exclusions from tariffs and trade remedy policies of antidumping and countervailing duties. These two channels have received less research attention. Third, it explores why China fell more than 40 percent short of meeting the goods purchase commitments set out for 2020, the first year of the phase one agreement. Finally, the paper considers additional trade policy actions—involving forced labor, export controls for reasons of national security or human rights, and reclassification of trade with Hong Kong—likely to affect US-China trade beyond the Trump administration.
Topic:
Education, Trade Wars, Trade Policy, and Protectionism
Political Geography:
China, Asia, North America, and United States of America

10. Deglobalisation in the context of United States-China decoupling

Author:
Alicia Garcia-Herrero and Junyun Tan
Publication Date:
12-2020
Content Type:
Policy Brief
Institution:
Bruegel
Abstract:
After decades of increasing globalisation on every front, from trade – pushed further by the growing role of value chains – to technology, movement of people and investment, there now seems to be a turn towards slower globalisation if not deglobalisation, at least in some areas. Deglobalisation is not a new concept but rather a megatrend which has been seen before, for example right before the First World War. Signs of deglobalisation, measured by decelerating trade and investment, and smaller global value chains, started to appear already in 2008. But this trend seems to have accelerated because of the United States’ push to contain China in the context of the strategic competition between the two. Such containment is apparent not only in bilateral trade and investment flows but also in technology. COVID-19 has been a second very important factor contributing to deglobalisation. The most obvious impact has been in movement of people. However, the trend towards deglobalisation is much less evident for finance, with the exception of foreign direct investment, though increasing attempts by the US and China to decouple particular types of financial flows are emerging, including the delisting of Chinese companies from US stock exchanges and the imposition of sanctions for transactions with certain Chinese companies and individuals. Overall, it is too early to confirm the depth and the sustainability of the current wave of deglobalisation, but an increasing number of signals suggest a trend of deglobalisation is underway.
Topic:
Globalization, Bilateral Relations, Geopolitics, Investment, Trade Policy, and COVID-19
Political Geography:
China, Asia, North America, and United States of America