"Current US-China Relations to Continue After US Presidential Election... South Korea Must Pursue Active Trade Policy"

[Asia Economy Reporter Ki-min Lee] Regardless of the outcome of the U.S. presidential election, it is expected that U.S.-China relations and trade policies will be maintained for the time being, prompting calls for South Korea to pursue pragmatic and flexible responses along with proactive trade policies.

The Korea Chamber of Commerce and Industry (KCCI), in collaboration with the law firm Bae, Kim & Lee LLC, held the "3rd KCCI Trade Forum" on the 24th to discuss trade policies after the U.S. presidential election and response strategies for Korean companies amid the era of strategic competition between the U.S. and China. Fourteen experts from the host organizations KCCI and Bae, Kim & Lee LLC, as well as government, academia, industry, and research institutions, participated in the meeting.

◆ "Donald Trump vs Joe Biden... Regardless of who wins the U.S. presidential election, a tough stance on China will be maintained"

At the forum, Insoo Pyo, a U.S. attorney at Bae, Kim & Lee LLC and a presenter, stated, "Even if Joe Biden, the Democratic candidate known to be pro-China, wins the election, he will have to consider the views of the U.S. Congress and the public, so a tough policy toward China regarding currency manipulation, dumping, and intellectual property rights infringement will be maintained." He added, "The U.S. will strategically pressure China through cooperation with allies such as the European Union (EU), Japan, Australia, and India."

He also noted, "While a full return to past multilateralism such as the World Trade Organization (WTO) will be difficult, issues like environment, digital trade, intellectual property rights, state-owned enterprises, and subsidies may be discussed at the multilateral level." He forecasted, "Although the possibility of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is currently low, negotiations will proceed to hold Pacific countries and China accountable." Attorney Pyo anticipated policy directions following the U.S. election results to include ▲large-scale domestic economic stimulus measures ▲tough stance on China ▲expansion of digital trade and the Fourth Industrial Revolution ▲trade and investment policies emphasizing national security.

The second presenter, Su-dong Kim, head of the Trade Policy Office at the Korea Institute for Industrial Economics and Trade, analyzed, "The conflict that began with the imposition of additional tariffs between the U.S. and China in 2018-2019 (first phase) has entered a 'second phase' in 2020, with comprehensive pressure on China over COVID-19 responsibility, technology and industrial regulations, political issues such as human rights and freedom, and audits of Chinese companies listed in the U.S." He added, "China's position in the global value chain (GVC) and its growth momentum will weaken and slow down."

He continued, "The strategic competition between the U.S. and China in advanced technologies is expressed through 5G, semiconductors, artificial intelligence (AI), Huawei sanctions, and intellectual property disputes." He predicted, "The U.S. will respond comprehensively with high tariffs, restrictions on Chinese investments in the U.S., direct sanctions on Chinese companies, and formation of anti-China alliances as measures to protect technology and intellectual property rights."

As responses for Korean industry, Kim cited ▲rebuilding supply chains and transitioning to advanced manufacturing ▲securing strategic autonomy in materials, parts, and equipment (MPE) through next-generation supply chain strategies ▲diversifying sources of technology and intermediate goods and pioneering industrial globalization frontiers ▲close linkage between reshoring policies and industrial policies.

◆ Participants emphasize "government should pursue pragmatic responses and proactive trade policies"

Participants at the forum stressed that in preparation for prolonged large-scale decoupling between the U.S. and China, South Korea should pursue flexible, pragmatic responses such as China Plus and leverage its elevated status as a leader in K-quarantine, ICT, and culture to implement proactive trade policies.

They noted that both U.S. President Donald Trump and candidate Joe Biden emphasize active enforcement of the United States-Mexico-Canada Agreement (USMCA), and particularly, Biden has specified environment and labor as important agendas in bilateral negotiations. While advocating a return to multilateralism, they called for "multifaceted and flexible policies" to prepare for bilateral negotiations. They also emphasized the importance of promptly concluding CPTPP accession, finalizing the Regional Comprehensive Economic Partnership (RCEP) within the year, continuously pursuing the New Southern Policy, and strengthening cooperative relationships with key strategic countries such as ASEAN and India.

Woo Tae-hee, the full-time vice chairman of KCCI who chaired the meeting, said, "Regardless of which candidate wins the U.S. presidential election, a tough stance on China and changes in global supply chains are expected to continue." He added, "Active public-private responses are needed for continuous promotion of China Plus and the New Southern Policy, comprehensive review of supply chains in the North American market (USMCA) and Europe, and utilization of economic stimulus measures after the U.S. election."