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61. Economic Relations between Russia and South Korea in the New Northern Policy

Author:
Liudmila Zakharova
Publication Date:
12-2019
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The New Northern Policy, proclaimed by the South Korean President Moon Jae-in in Vladivostok in September 2017, is designed to boost economic cooperation between Russia and South Korea. However, two years after a special presidential committee was created to plan and coordinate joint economic efforts, few results have been achieved. Bilateral trade has continued to increase with limited change to its structure: Russia mostly sends its mineral resources to South Korea and receives industrial products in return. New ROK investment in the Russian Far East has yet to occur, despite South Korea’s efforts to assist its businesses in finding profitable Russian projects. Seoul tried to convince Moscow that concluding a free trade agreement in the near future is necessary for intensified cooperation, but Russia prefers a more gradual approach to trade liberalization. InterKorean rapprochement in 2018 laid a foundation for further progress in the implementation of multilateral economic projects involving Russia if the international sanctions against North Korea were to be eased. Therefore, bilateral relations between Russia and the ROK can also be viewed from the perspective of promoting regional cooperation with North Korean participation.
Topic:
International Relations, Economics, and Bilateral Relations
Political Geography:
Russia, Asia, South Korea, North Korea, and Korea

62. Finding an Advocate: The Role of the Private Sector in Korea-Japan Relations

Author:
Jiwon Nam and Kristin Vekasi
Publication Date:
06-2019
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Tensions between South Korea and Japan are frustratingly persistent. Despite the shared interests of both countries, such as economic development in Southeast Asia, and keeping a robust alliance with the United States, South Korea and Japan maintain a bellicose relationship because of unresolved historical misunderstandings and territorial disputes. Inconsistent diplomatic policies and lack of strong leaders have made it difficult to prevent unnecessary hostility between South Korea and Japan. Fear of losing support has prevented politicians from pursuing friendly policies towards each other. Businesspeople, too, have been reluctant to pursue friendly policies towards each other, because of preconceived risks of being targeted for backlash. An examination of economic data shows these risks are minimal, and political tensions do not affect business or consumer behavior. Current efforts from both Korean and Japanese business organizations to improve cooperation include student exchange programs, recruitment processes, and public diplomacy. We urge the business community to advocate more to improve bilateral relations. Economic relations alone are insufficient to handle the task of improving a difficult relationship; there is also a need for leadership. In South Korea-Japan relations, the business community should step in and provide that role.
Topic:
Economics, Bilateral Relations, Business, and Private Sector
Political Geography:
Japan, Asia, South Korea, North America, Korea, and United States of America

63. From Failed Economic Interfaces to Political Levers: Assessing China-South Korea Competition and Cooperation Scenarios on North Korean Special Economic Zones

Author:
Théo Clément
Publication Date:
06-2019
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
While North Korea has developed Special Economic Zones for several decades now, these zones have attracted little attention from foreign investors, due to a mix of lack of economic reforms in the DPRK, the tense geopolitical situation, and China’s peculiar economic engagement towards North Korea. With the denuclearization process and North-South dialogue moving forward, this situation could change as South Korea’s announced policy of economic engagement with the North could provide Pyongyang the opportunity to play Beijing against Seoul to maximize its interests and attract foreign investment in Special Economic Zones from partners keen to maintain close ties with the DPRK.
Topic:
Economics, Bilateral Relations, Investment, Trade, and Denuclearization
Political Geography:
Asia, South Korea, North Korea, and Korea

64. Renewable Energy in Trade Wars: Solar Power in South Korea’s Energy Mix and the Impact of Protectionism

Author:
June Park
Publication Date:
01-2019
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This paper examines the impacts of global competition in solar panel production and the conflict of domestic interests among solar-related industries in the U.S. on South Korea’s solar-focused renewable energy policy. Examining the Moon Jaein administration’s energy policy amid the impact of the U.S. safeguard on South Korean solar panels, the paper argues a) the U.S. safeguard is a hindrance to South Korea’s path forward on solar panel production, and b) Moon’s sole focus on sustainability and his ambitious solar energy target will result in further adoption of lower-cost Chinese solar panels, foregoing the opportunity to upgrade South Korean panels. As South Korean firms announce their decisions to relocate to the U.S. to avoid U.S. safeguard tariffs, the paper recommends the destinations of South Korean solar panel exports be diversified and the goals of South Korean energy policy be centered on balancing cost, stability, and sustainability. The paper does not necessarily recommend a full-fledged drive on expanding solar energy use in South Korea; rather, it calls for the strategic reevaluation of energy policy upon which a clear and sound strategy for solar energy should be formulated.
Topic:
Energy Policy, Bilateral Relations, Trade Wars, Renewable Energy, and Solar Power
Political Geography:
Asia, South Korea, North Korea, Korea, and United States of America

65. Advancing the U.S.-Korea Economic Agenda

Author:
Wendy Cutler and Hyemin Lee
Publication Date:
01-2019
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
For nearly 70 years, the United States-Republic of Korea alliance has remained strong, built mainly on shared strategic and national security interests. While the North Korean nuclear threat has long dominated political discussions and media headlines, the economic pillar of the relationship is no less important. With amendments to the U.S.-Korea Free Trade Agreement (KORUS) now in place, it is an opportune time for both countries to look beyond KORUS and expand their bilateral economic engagement to new and evolving areas. This closer cooperation can serve as an engine for growth in a slowing Korean economy, as an opportunity for job creation in the United States, and as a vehicle for jointly writing the rules for the technologies of the Fourth Industrial Revolution. As policymakers in Washington and Seoul look to the future, the Asia Society Policy Institute (ASPI) charts a possible path forward in its newest issue paper, Advancing the U.S.-Korea Economic Agenda. This paper presents a range of concrete actions that the United States and South Korea can take to advance and strengthen their bilateral economic relationship in the areas of trade and investment, energy, digital economy and advanced technologies, infrastructure, and women’s economic empowerment. The recommendations included in this paper are based partly on two roundtables ASPI organized with South Korean and American experts in Seoul in June 2018, with support from the Korea Institute for International Economic Policy, and in Washington, D.C., in October 2018. The ideas are also based on discussions with government officials, business leaders, and think tank experts.
Topic:
National Security, Treaties and Agreements, Bilateral Relations, Alliance, and Trade
Political Geography:
Asia, South Korea, North America, and United States of America

66. The Case for Kaesong: Fostering Korean Peace through Economic Ties

Author:
International Crisis Group
Publication Date:
06-2019
Content Type:
Special Report
Institution:
International Crisis Group
Abstract:
The Kaesong Industrial Complex, closed since 2016, was the most successful joint economic venture undertaken by North and South Korea. Reopening the manufacturing zone, with improvements to efficiency and worker protections, could help broker wider cooperation and sustain peace talks on the peninsula. What’s new? In 2016, South Korea shuttered the Kaesong Industrial Complex, breaking a modest but productive connection between the two Koreas. Crisis Group’s analysis sheds new light on the economic performance of firms operating at the Complex, demonstrating that the benefits for the South were greater than previously understood. Why does it matter? Beyond helping restart the stalled peace process, a deal to reopen the Complex in exchange for a proportionate step toward denuclearisation by North Korea could produce mutual economic benefits that help sustain South Korean support for talks and encourage Pyongyang’s commitment to peaceful relations. What should be done? As part of any deal to reopen the Complex, Seoul and Pyongyang should take steps to address problems that previously kept it from reaching its potential. The more efficiently, profitably and fairly it works, the better the Complex can help foster and maintain stable, peaceful relations between the Koreas.
Topic:
Economics, Bilateral Relations, Negotiation, and Peace
Political Geography:
Asia, South Korea, North Korea, and Korea

67. The North Korean Détente: Peace Prospects on the Korean Peninsula

Author:
Jonathan Lim
Publication Date:
04-2019
Content Type:
Journal Article
Journal:
International Journal of Korean Studies
Institution:
International Council on Korean Studies
Abstract:
This paper conceptualizes the emerging détente within inter-Korean relations as evidence of tangible transformations within North Korea’s domestic and foreign policy, establishing how this phenomenon represents a unique and conclusive opportunity for peace and engagement. It contextualizes the inter-Korean and Singapore summits as foundations for the détente, before expanding upon the nature of the détente through the contrasting objectives of North and South Korea, and the transitional nature of domestic affairs in North Korea. The article establishes the bona fide nature of North Korea’s détente, as revealed by a direct connection between North Korea’s international diplomatic gestures vis-av-vis transitional domestic circumstances; involving incremental economic modernization and political liberalization under a shift in focus within Kim Jong-un’s Byungjin Line policy. This analysis departs from and orthodox Western interpretation of inter-Korean relations, providing a holistic analysis of inter-Korean affairs and North Korean domestic politics.
Topic:
Foreign Policy, Diplomacy, Bilateral Relations, Conflict, and Peace
Political Geography:
Asia, South Korea, North Korea, and Singapore

68. Monetizing The Linchpin: Trump's Foreign Policy versus the U.S.-Korea Alliance's Value to Washington

Author:
Kyle Ferrier
Publication Date:
12-2019
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The Trump administration’s increased emphasis on the cost of the U.S.-South Korea alliance has called into question its appreciation of Seoul’s contributions and raised concerns about the future of the relationship. Amid this uncertainty, this paper highlights key, yet underappreciated benefits that Washington receives from a strong alliance with Seoul. The cost-centric approach being applied to the U.S.-South Korea relationship follows an overarching trend in U.S. foreign policy under Trump, which the paper terms as “trading intangibles for tangibles.” In effect, the White House greatly underestimates the intangible value of longstanding U.S. foreign policy norms, often leveraging them—and in doing so, undermining them—in favor of short-term economic gains. Though intrinsically more difficult to quantify in dollars, intangible aspects of U.S. foreign policy have much greater financial and economic value to the United States. Consequently, and counterproductively, the Trump administration’s approach may actually prove to challenge the U.S. financially, even in areas where the economy isn’t directly involved, such as the U.S. alliance system. In the case of South Korea, Washington is putting its alliance credibility—consisting of deterrence against Pyongyang and assurance with Seoul—on the line by attempting to extract major financial concessions from Seoul, chiefly through military burden-sharing negotiations. The annual $5 billion contribution the U.S. is reportedly asking South Korea to agree to by the end of the year is a steep jump from the just under $1 billion Seoul agreed to earlier in the year. However, this annual $5 billion is dwarfed by what strong alliance credibility with Seoul provides Washington, which is at risk from the Trump administration’s intensified focus on cost. Still, the challenge remains that the nature of these benefits makes them difficult to quantify in dollars. To bridge this gap, the paper recontextualizes existing monetary figures across an array of areas to illustrate a baseline value of the key security benefits Washington enjoys through a strong U.S.-South Korea alliance—essentially, “tangibilizing” the intangibles. Though the actual list of benefits is far more expansive, the three explored in the paper are: preventing the return of armed conflict on the Korean Peninsula, fostering foreign policy convergence on the Korean Peninsula, and supporting common values in the Indo-Pacific.
Topic:
Security, Foreign Policy, Bilateral Relations, Alliance, and Donald Trump
Political Geography:
Asia, South Korea, North America, and United States of America

69. The Trump Economic Impact on East Asia after Two Years: The Case of South Korea

Author:
Yoon Yeo-joon
Publication Date:
07-2019
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The U.S.-South Korea relationship has traditionally been characterized as a security alliance, meeting the interests of both countries for a stable Korean Peninsula. Economically, Korea was a major recipient of U.S. development assistance after the Korean War. The U.S. also provided non-reciprocal preferential trade treatment, which played an important role in Korea’s economic development. After Korea’s unprecedented economic development, the economic relationship between the two countries progressed from mere donor-recipient relations. The U.S.-Korea economic partnership culminated in the Korea-U.S. free trade agreement (KORUS FTA), which came into effect in 2012. During the past 70 years, the U.S. has become the second most important export destination and the third most important importer for Korea. Korea has also risen to be the sixth largest trading partner for the U.S. During these years, Korea has also benefited from common values shared with the U.S., such as democracy, rule of law, and an open and free market economy. Two years into the Trump administration, the U.S.-Korea economic relationship is facing another turning point. Trump is a game changer, trying to alter the global trading system and its relation to China. Korea has been only partially affected by his grand scheme so far. However, Trump specifically blamed the KORUS FTA as a major contributing factor to the U.S.’ huge trade deficit and domestic job losses in manufacturing. As a result, the KORUS FTA was amended. Various protectionist measures, such as Section 201 tariffs on washing machines and solar panels as well as Section 232 tariffs on steel and aluminum, could have a substantial impact on Korea. Rising protectionism in the U.S. is a grave concern for Korea considering the significance of the U.S. to the Korean economy. This chapter explores U.S.-Korea economic relations two years into the Trump administration—too short a time to make definitive statements such as whether the relationship has deteriorated or not. The chapter is organized as follows. Section 2 describes the economic relations between Korea and the U.S., focusing on trade and investment. Section 3 covers the KORUS FTA renegotiations, which were recently settled. It includes what was decided and the implications for the Korean economy. Section 4 summarizes the protectionist measures that the Trump administration has imposed and how these measures would impact Korea, adding a simple empirical analysis that investigates whether the U.S. trade balance with Korea improved over the two years. Section 5 concludes the chapter.
Topic:
Foreign Policy, Economics, Bilateral Relations, Trade, and Donald Trump
Political Geography:
Asia, South Korea, and United States of America

70. Sino-Russian Relations, South Korea, and North Korea

Author:
Robert Sutter
Publication Date:
07-2019
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This examination of the relations among these four governments assesses the ever-closer China-Russia relationship featuring stronger strategic alignment against the United States and its interests in many parts of the world, including the Korean Peninsula. It also considers how the Sino-Russian relationship reacted to the major changes in the Korean Peninsula brought on by the string of remarkable developments on the peninsula since 2017. Those developments include: the Donald Trump administration’s heavy pressure against North Korean nuclear weapons development in 2017; North Korea’s abrupt shift away from confrontation and toward negotiations with the U.S. and South Korea in early 2018; the subsequent dramatic shift toward top-level U.S.-North Korea negotiations to ease tensions and improve relations seen in Trump’s meetings with North Korean leader Kim Jong-un in June 2018 and February 2019; and active, related North Korean summitry with South Korea and China. In this period, China and Russia in relations with South Korea and North Korea repeatedly worked together to offset U.S. pressures and undermine U.S. influence. Developments over the past two years have seen China emerge as a critically important player with a major role in all aspects of negotiations involving the crisis caused by North Korea’s rapid development and repeated testing of nuclear weapons and related development and testing of ballistic missiles capable of carrying a nuclear warhead as far as the continental U.S. By contrast, Russia’s role and influence have declined in importance. The failed revival of the Six-Party Talks, in which Russia and Japan played a direct role along with North and South Korea, China, and the U.S. in dealing with the North Korean nuclear weapons crisis, and the current regional dynamic focused on only the four latter powers means that Moscow and Tokyo have been marginalized by recent developments. Such an outcome challenges the Russian government of President Vladimir Putin and its drive to play a prominent role as a leading world power on issues important to Russian interests. Demonstrating new prominence, Putin hosted visiting Kim during a brief summit long sought by Russia in Vladivostok on April 25. The Russian leader said North Korea’s security concerns would be better met with international guarantees involving Russia and China rather than bilateral North Korean agreements with the U.S. Up until this point, Russia had been playing second fiddle to Beijing, repeatedly siding with China in matters regarding the Korean Peninsula. China, for its part, seemed comfortable with close cooperative relations with Russia as it deals with Korean matters. Whatever differences the two may have over Korean issues have been difficult to discern amid their collaboration and cooperation, which focus on weakening the American position in Korea and Northeast Asia.
Topic:
International Relations, Security, Foreign Policy, Diplomacy, and Bilateral Relations
Political Geography:
Russia, China, Asia, South Korea, and North Korea