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11. Korea’s Trade Policy Agenda in an Uncertain US Trade Environment

Author:
Alan Wm. Wolff and Han-Koo Yeo
Publication Date:
07-2024
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
This paper addresses how South Korea, a mid-sized ally of the United States, can best navigate clearly identifiable risks, crafting a positive and pragmatic international trade policy. Korea is heavily dependent on the United States for its defense. It is clear that US trade policy has recently shifted toward being more self-centered, a policy unlikely to be reversed any time soon. The United States is on the threshold of a presidential election that makes it unpredictable in its trade policy, which may become directly harmful to Korean economic prospects if there is a change in leadership. US trade policies under President Joseph Biden have been primarily aimed at onshoring rather than friendshoring, but they have not been actively hostile or threatening. If there is a second Donald Trump term, Korea might not be excluded from substantially increased tariffs—whether for protection, revenue, or leverage—despite the Korea-United States Free Trade Agreement (KORUS FTA). At the same time that Korea is watchful of developments in the United States, it needs to pay attention to its neighbor, China, the world’s largest trading economy, a country that has practiced trade coercion against it. South Korea is the world’s 13th-largest economy. It is a strong proponent and practitioner of free trade. It is one of a group of midsize free market democracies aligned with the United States that, ranked by GDP, includes Japan, Germany, and France (and therefore with others, the European Union), the United Kingdom, Canada, Italy, and Australia. The future of the global trading system that the market-oriented countries wish to enjoy is increasingly dependent on this group of midsize economies and the European Union. Korea has thrived in large part through its open trade policy that has made it the country with the world’s greatest number of free trade agreements (including with both the United States and China, as well as with the European Union). It shares strong economic security interests with the United States: It has its own K-CHIPS Act, which provides substantial subsidies to its semiconductor industry. It invests very substantially in critical minerals and batteries, as does the United States. Korea also collaborates with the United States in the production of vaccines to meet future pandemics.
Topic:
Climate Change, Bilateral Relations, Geopolitics, Investment, Trade, Economic Security, Semiconductors, Steel, and Critical Minerals
Political Geography:
Asia and South Korea

12. East Africa’s Potential Role in US Graphite Supply Chains

Author:
Cullen S. Hendrix
Publication Date:
07-2024
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The impact of the green tech trade war between the United States and China, which began with US semiconductor export controls, is now being felt in other areas. In December 2023, China introduced export controls on graphite, a key element used in the production of noncarbon technologies like batteries and solar panels. The effects were immediate: Chinese graphite exports to the rest of the world declined by 93 percent (by volume) in a single month. Exports to the United States and Japan—which is collaborating with the United States on semiconductor controls—dropped to zero.1 But although China is the largest player, it is not the only graphite producer in town. This Policy Brief assesses the prospects for three Sub-Saharan African countries—Madagascar, Mozambique, and Tanzania—for providing stable supplies of natural graphite to the US market, considering both domestic factors in the three countries and US policies established by the Inflation Reduction Act (IRA). These countries have adequate graphite resources and operators headquartered in Western allies. The problem is that there are significant governance-related challenges in Madagascar and Mozambique and some domestic challenges to incorporating East African graphite into US electric vehicle (EV) supply chains. US critical mineral sourcing policies will need to be modified to facilitate greater involvement of African producers in US graphite supply chains.
Topic:
Supply Chains, Electric Vehicles, Critical Minerals, and Graphite
Political Geography:
Africa, Mozambique, Tanzania, Madagascar, East Africa, and United States of America

13. What African producers of critical minerals can learn from Indonesia’s experience

Author:
Bradford Simmons
Publication Date:
12-2024
Content Type:
Special Report
Institution:
Atlantic Council
Abstract:
With its success in nickel production, Indonesia has become a model for those seeking to harness “resource nationalism” for domestic benefit. Substantial foreign investment, particularly from China, has been a key variable for Indonesia to become a globally relevant industrial center for nickel processing. While there are insightful lessons that policymakers from mineral-resource-rich African countries can learn from Indonesia, there must be caution in implementing some of Indonesia’s policies, especially export bans as they have had mixed results and depend heavily on external factors. Africa holds a third of the world’s mineral reserves, including critical minerals essential to the green energy transition. Yet, the continent remains underexplored, underdeveloped, and underfunded, receiving just 8–10% of global exploration and investment. Global demand for minerals like copper, nickel, cobalt, and lithium is expected to generate $16 trillion over the next 25 years, with sub-Saharan Africa potentially capturing $2 trillion. However, to realize this potential, Africa must shift from raw extraction to value-added processing. Developing local processing industries would boost economic diversification, job creation, tax revenues, and technological advancements while reducing dependency on raw-material exports. To achieve this, African governments must prioritize coherent, forward-looking policies that emphasize value creation. Commissioning technoeconomic studies to identify key supply chain opportunities will help guide investments. Establishing Special Economic Zones for critical minerals can attract international investors and foster industrial hubs. Leveraging the African Continental Free Trade Area to create robust commodity markets would position Africa as a competitive player. Additionally, streamlining regulatory processes, supporting carbon-free power projects, and advancing infrastructure investments through global initiatives such as the US PGI and EU Global Gateway can facilitate critical mineral processing and transport networks. Export bans, though well-intentioned, often backfire. Historically, they have reduced exports, weakened global trade positions, and worsened infrastructure challenges in energy, transportation, and logistics. Without effective governance and political stability, such policies risk stalling economic growth rather than stimulating it. By focusing on industrial infrastructure, value-added processing, and policies that promote long-term diversification, African countries can move beyond the limitations of raw extraction. With transparent governance and strategic investments, the continent can transform its mineral wealth into a driver of sustainable economic development.
Topic:
Environment, Energy Transition, Critical Minerals, and International Markets
Political Geography:
Africa, Indonesia, Southeast Asia, and Indo-Pacific

14. Friend-shoring in the Indo-Pacific

Author:
Akhil Ramesh and Rob York
Publication Date:
11-2023
Content Type:
Special Report
Institution:
Pacific Forum
Abstract:
The COVID-19 pandemic and Russia’s invasion of Ukraine highlight the challenges of increased economic interconnectedness with adversarial states. The shortages in critical sectors such as pharmaceuticals, semiconductors, and other industries significant for technological advancement in the fourth industrial revolution have revealed the importance of select supply chains to the American public and the broader global community. As the strategic competition between the US and China accelerates, understanding of their importance will only grow. The Biden administration, to its credit, realized early on the importance of four critical sectors for the future of US supply chain security: pharmaceuticals, critical minerals, large-scale batteries, and semiconductors. Alarmingly, through the research presented here by Akhil Ramesh and myself, we see that the People’s Republic of China has deeply embedded itself in three of these four sectors, and still seeks to strengthen its position in the fourth (semiconductors). Also, one of the recurring problems highlighted in this research is the tendency of the administration to consider the job done once it sources a critical technology from somewhere other than China—not realizing that the PRC serves as a source for that country elsewhere in the supply chain.
Topic:
Pharmaceuticals, Supply Chains, Semiconductors, Batteries, and Critical Minerals
Political Geography:
United States of America and Indo-Pacific