Intensifying Debate Between Ministry of Foreign Affairs and Ministry of Industry Over Trade Functions

[Asia Economy Reporter Yoo In-ho] A dispute is heating up between the Ministry of Foreign Affairs and the Ministry of Trade, Industry and Energy over the organizational restructuring plan for trade functions under the Presidential Transition Committee.

As the Transition Committee is about to announce the organizational restructuring plan for trade functions, the tension between the two ministries has intensified, sparking controversy over a turf war.

According to diplomatic sources on the 3rd, as the Transition Committee began reviewing the retention of trade functions within the Ministry of Trade, Industry and Energy, the ministry has taken a stance to 'defend' its position, while the Ministry of Foreign Affairs is making every effort to 'reclaim' it.

The trade organization and functions were transferred to the Ministry of Trade during the Kim Young-sam administration, moved to the Ministry of Foreign Affairs during the Kim Dae-jung administration, and then returned to the Ministry of Trade, Industry and Energy under the Park Geun-hye administration, continuing to the present.

The Ministry of Foreign Affairs argues that having trade negotiation rights is essential to strengthening economic security capabilities. They claim that the Ministry of Foreign Affairs has an advantage in negotiations. The ambassador to Geneva, who is affiliated with the Ministry of Foreign Affairs, handles on-site negotiations at the World Trade Organization (WTO), but since the Ministry of Trade, Industry and Energy oversees trade functions, it is difficult for them to gain influence.

The Ministry of Trade, Industry and Energy insists that the ability to resolve trade disputes should be prioritized. Since the transfer of trade functions to the ministry in March 2013, South Korea has achieved a 100% success rate in final rulings on trade disputes.

During the trade dispute over the export of Fukushima seafood from Japan in April 2019, South Korea overturned a first-instance loss by winning in the second instance. The ministry also received high marks for its response to Japan's export restrictions. Another strength is the smooth cooperation with the industrial sector, which has a direct stake in FTAs.

However, a weakness cited is that the number of personnel specializing in trade within the Ministry of Trade, Industry and Energy is very limited.

Given this situation, the Transition Committee has also issued a warning message to both ministries.

Won Il-hee, the Transition Committee’s senior deputy spokesperson, stated at a briefing on the 30th of last month regarding the conflicting opinions on organizational restructuring between the Ministry of Trade, Industry and Energy and the Ministry of Foreign Affairs, “The organizational restructuring is now entering the discussion phase, and no conclusion has been reached; it is still under review,” adding, “In this broad review process by the Transition Committee, it is inappropriate for individual ministries to make public statements.”

Diplomatic circles believe it will be difficult for the Transition Committee to find a solution. Regardless of the outcome, concerns remain about controversies and backlash as side effects.

Some argue that the issue is not which ministry should be in charge, but rather addressing the current shortage of trade experts. Voices calling for the independence of trade functions are also emerging for this reason.

Looking at overseas cases, countries where the Ministry of Foreign Affairs oversees trade include Canada, Australia, and New Zealand. China, Japan, India, and Mexico have their Ministries of Trade in charge of trade.

In the case of the United States, an independent organization, the United States Trade Representative (USTR), operates. The EU has a structure where the European Commission oversees trade negotiations.