[Op-Ed to celebrate U.S.-Korea Summit] Next leap forward for US-Korea economic partnership
Next leap forward
for US-Korea economic partnership
By
James Kim, The Korea Time - This year marks the 70th anniversary of the
U.S.-Korea alliance, representing a significant milestone in the bilateral
relationship between the two countries.
Under
the leadership of President Joe Biden and President Yoon Seok Yeol, the
economic partnerships between the two countries have both diversified and
deepened. The first Biden-Yoon summit, which took place last year, served as a
symbolic occasion that highlighted the importance of the partnership in
managing global challenges.
While
we celebrate this milestone, it is still crucial to promote greater cooperation
amidst the various global challenges and uncertainties that exist. These
challenges range from public health and a global recession to supply chain
issues and climate change.
Nonetheless,
the U.S.-Korea alliance has grown stronger since the summit, with ongoing
strategic dialogue taking place on various global issues.
Against
the backdrop of rising geopolitical tension in the region, President Biden and
President Yoon issued a significant mandate to the business communities of
their respective countries to enhance bilateral trade and investments and
collaborate in critical sectors such as semiconductors and advanced technology.
Given the importance of this mandate, President Yoon's state visit to the U.S.
this week comes at a critical juncture.
In
this regard, I would like to offer some key considerations that should guide
the agenda of the summit, particularly from the perspective of the foreign
business community in Korea.
The
Indo-Pacific Economic Framework (IPEF), which launched May of last year, offers
a unique opportunity for the U.S. and Korea to shape the regulatory environment
in the region. Korea, an early participant in the IPEF, has set out its vision
to become a Global Pivotal State, with a commitment to assume leadership on
important global issues.
As
the IPEF negotiations continue, it is crucial for both countries to reach an
agreement on key regulatory standards, particularly in the digital economy.
Free-flowing cross-border data transfer is an important enabler for digital
trade, which is one of the key pillars of the IPEF and global economy.
Establishing global standards among the 14 IPEF participants would facilitate
greater trade and investment through the IPEF network, which currently accounts
for 40 percent of global GDP.
Regarding
global supply chain resiliency, it is essential for the U.S. government to
collaborate with its allies to establish regulatory certainty and
predictability by promoting "friendshoring."
The
U.S. Treasury's recent guidance on the Inflation Reduction Act's (IRA)
subsidies has been received positively in Korea, as it relaxed the requirements
on critical minerals and battery components and allowed free trade agreement
(FTA) partners, including Korean battery makers, to be eligible for federal tax
credits in the U.S.
However,
the guidance does not offer exemptions to waive the domestic electric vehicle
(EV) manufacturing requirement for some FTA partners, such as Korea, which is
not consistent with the spirit of "friendshoring." Providing a grace
period for EV makers would allow businesses to adapt to new regulations and
alleviate potential trade disruptions.
Given
the growing strategic importance of the U.S.-Korea alliance, the American
Chamber of Commerce in Korea (AMCHAM) recognizes the significance of establishing
Korea as a regional headquarters in the Asia Pacific.
According
to the 2023 AMCHAM Business Survey, Korea has maintained its position as the
second most appealing location for regional headquarters for two consecutive
years, after Singapore.
To
further enhance Korea's competitiveness, it is crucial to establish Korea's
leadership in ESG (environmental, social, and corporate governance). RE100,
which aims to accelerate the transition to net-zero emissions by 2050, is now a
vital indicator of a country's business environment. Women's economic
participation and opportunity are also key factors in ESG.
By
making significant progress in clean energy transitions and women's economic
empowerment, Korea can enhance its global standing on ESG on par with its
leadership in the global trade system.
Last
year marked a surge in foreign direct investments (FDI) for the U.S. and Korea,
with record-breaking numbers. Korea recorded its largest FDI to date, while the
U.S. led the way with an investment of $8.69 billion in key technologies.
Additionally, Korean investments in the U.S. continued to gain momentum,
exceeding $27 billion.
These
developments highlight the importance of the upcoming summit as trade and
investment have become critical elements of the alliance. The summit provides
an excellent opportunity for both countries to reinforce their shared values
and goals through meaningful and productive dialogue, taking the U.S.-Korea
economic partnership to the next level.
Despite
the challenges posed by the pandemic and geopolitical dynamics in the region,
we are confident that Korea is poised to emerge as the leading destination for
regional business headquarters going forward. Korea has grown stronger as the
world's 10th-largest economy.
As
the leading voice of the global business community in Korea, AMCHAM remains committed
to serving as a true partner to both the U.S. and Korean governments in
creating a strong, fair, and globally competitive economy.
We
look forward to deepening the vital bilateral trade and investment ties between
the U.S. and Korea through a more powerful, mutually beneficial partnership.
Source:
https://www.koreatimes.co.kr/www/tech/2023/04/129_349484.html
2023.04.26
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