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Korea Society Corporate Forum Address by Amb. Gheewhan Kim
Consul General of the Republic of Korea in New York May 5, 2015
Good afternoon, ladies and gentlemen.
I’d like to thank the Korea Society for their kind invitation to the Corporate Forum.
For me, it has been one month since I came to New York; and today’s forum is my first public presentation here.
I am very pleased and honored to begin my presentation here at the Korea Society.
Whether it is a special exhibition or a policy series podcast, I can always count on Korea Society to present the rich history and culture of Korea; all the while delivering the most timely and cogent issues surrounding Korea and our bilateral relations to the fore.
And once again, I am profoundly grateful to be a part of your ongoing legacy.
This afternoon, I’ll be talking about the Korea-US partnership.
But rather than limiting my talks to a bilateral relationship, I’ll be taking this opportunity to discuss a broader topic of economic engagements of regional implications and the future impact this will have for all of us.
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Rebalance to Asia
First of all, let me talk about Asia.
What are the challenges? And, how are we responding to such challenges?
To this, I would say that the challenges are the questions of how to engage China and its rise, namely from both aspects of security and economy; and also a more immediate concern of how to effectively deter and contain North Korean threats.
Facing these challenges, Obama administration is pursuing a foreign policy of
“rebalancing” to Asia.
As you know, there is a mismatch between economic interdependence and multilateral political or security cooperation mechanism in Asia. We call it the “Asia Paradox.”
On one hand, the region’s economies are becoming more and more intertwined. There exist economic cooperation forums like APEC. On the other hand, there lacks political and security cooperation mechanisms to address security challenges.
In Asia, there are no overarching security apparatus or architecture in the region like Europe’s Organization for Security and Cooperation in Europe (or OSCE).
With that in mind, the rebalancing policy is being implemented in a two-track approach.
One is to build robust security apparatus through active and interlocking defense alliances to augment defense postures of the US and her allies.
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The US military has extended its military presence in Australia. The expansion of defense cooperation between the US and Japan is underway.
And the other is establishing regional economic integration. Namely through the Trans- Pacific Partnership (or TPP), it would serve as a framework for shared prosperity and set high standards for trade and investment among the Pacific Rim countries.
The TPP is a “mega-FTA” that is designed to foster economic integration among 12 countries.
Japan is the key ingredient in this mix, in which all 12 economies combined would amount to 40 percent of the world’s economy.
Such a deal would surely counterbalance China’s increasing economic dominance in the region.
Against this backdrop, this year is the year of Asia, especially for the Obama administration.
The heads of government from Japan, Indonesia, Korea and China are invited to Washington for summit meetings this year.
This is the first time the key Asian leaders are invited for a series of summit meetings.
This reflects – in earnest – how Washington considers Asia to be important to its foreign policy; and the fact that Asia rebalancing is more than just rhetoric.
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Last week, as the first Asian leader to visit, Prime Minister Abe met with President Obama.
They revised the Joint Defense Guideline, which expands Japan’s security role, allowing Japan’s military to participate in defense operations around the globe.
Namely, the new guideline would allow deployment and a more robust participation of Japan’s forces in disaster relief, peacekeeping operations, missile defense and other military missions.
While China remained the elephant in the room, Beijing’s rapid modernization of its military and the rising threat levels of its territorial claims seem to be one of the main reasons for this new development.
Delving a little more detail into the security front, the US has to build a security framework via an interlocking alliance system, in order to effectively implement Asia rebalancing. As it currently stands, it consists of Korea-US and US-Japan alliances.
So it stands to reason that robust Korea-Japan relations, or even Korea-US-Japan
relations, should be the next natural step in keeping peace and stability in the region. But there is one caveat, when it comes to cooperating with Japan.
Japan’s revisionist approach towards the past history stymies the Korea-Japan relations from improving. Not only that, it hinders effective cooperation among the US, Korea and Japan.
Moreover, this contentious issue is needlessly antagonizing others, particularly China, and further isolating Japan from the region.
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In the long-run, what seems to me as a shortsighted insistence on part of the Abe government has to be changed; and “should take the path toward reconciliation and cooperation based on correct view of history, while squarely facing its history of colonial rule and aggression as well as its flagrant violations of human rights against the sexual slavery victims drafted by its Imperial Army during WWII.” (MOFA Statement, 4/30/15)
As this year marks the 70th anniversary of the end of the Second World War, Japan, namely the Abe government, must realize that they cannot let this history issue be the 800-pound gorilla that blocks the pathway to cooperation.
The only way to come to an earnest discussion and move forward is for Japan to build trust through honest acknowledgement of and remorse for its past wrongdoings.
However, in his address to a joint session of Congress, Prime Minister Abe failed to express this correct view of history and a heartfelt apology.
It’s regrettable that Japan lost this very important opportunity for reconciliation and cooperation among its neighboring countries.
Japan should not lose another, and perhaps the last meaningful, opportunity to move forward. Prime Minister Abe’s statement in August, marking the 70th end-of-war
anniversary, is that chance before momentum for progress is lost at this critical juncture.
Free Trade Agreements (TPP & KORUS FTA)
Let me turn to the economic front of Asia rebalancing.
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At the summit meeting last week between US and Japan, the two leaders strongly reaffirmed the importance of TPP.
It is said that the negotiations among the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam are nearing their finalization.
The negotiators describe and envision the TPP as a “comprehensive and high-standard”
FTA that aims to liberalize trade in nearly all goods and services and include rules-based commitments beyond those currently established in WTO.
In addition to market access for goods, services, and agriculture, 30 other chapters are being negotiated, including disciplines on intellectual property rights, trade in services, government procurement, investment, rule of origin, competition, labor, and environment.
TPP may also break new grounds in terms of covering topics like state-owned enterprises, regulatory coherence, and supply chain competitiveness.
Also as the most recent and comprehensive deal, the deal would meet the demands of cutting-edge technological changes of the 21st century. Issues of newly emerging
challenges, such as internet-based trade and data transfer beyond borders, would also be addressed.
With the aims of strengthening and deepening trade and investment ties and setting high standard, rule-based economic framework in the region, TPP is a vital component in the US “rebalancing” toward Asia – especially when joined by Japan, the world’s third largest economy.
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Once such framework is a fait accompli, it would “galvanize the discussions on the
Korea-China-Japan FTA,” while stimulating engagement with China. (FM Yun Remarks, 04/28/15)
Against this backdrop, Korea has expressed its interest in joining TPP in November, 2013.
Korea is an emerging FTA hub in Asia. Korea has agreements with 52 nations, notably with the US and EU, and is about to sign one with China.
As for TPP, we are already engaged in FTAs with 10 nations in the deal, with two
exceptions being Japan and Mexico. In a sense, by joining TPP, Korea will effectively be in a trade agreement with Japan, which will draw large attention.
This is also a great opportunity for Korea and Japan to talk to each other – discuss important things for themselves and for the region.
Korea will actively contribute to increasing regional connectivity as well as trade and investment liberalization by taking the lead in expanding the regional FTA networks.
At this juncture, I would like to introduce how the KORUS FTA has played a significant role in shaping TPP – and also, how it will lead the implementation of TPP when the deal is concluded and ratified.
As you may know, this is a very high quality FTA, which liberalizes 99.9% of the goods in trade, opens service markets and sets up high standards of rules in intellectual property rights, investment protection, financial services and regulation transparency.
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The KORUS FTA is a win-win deal. There’s no doubt. There are some challenges, but it’s still a win-win deal. We have a lot of proof of this.
Last year, Korea has become America’s 6th largest trading partner, surpassing Great Britain and France.
Compared to the year before the implementation, when the US ranked 4th behind Japan, now the US is Korea’s 3rd largest trading nation.
In 2014, our bilateral trade volume has risen 11.6% – from $103.6 billion in 2013 to
$115.6 billion.
The trade figures are indeed worthy of noting. Despite the global economic downturn in the recent years, Korea’s imports of FTA beneficiary goods from the United States last year have increased 9.1%, whereas Korea’s total imports from the world increased only by 1.9%.
In terms of year-on-year Korean investment to the United States in 2014, it jumped 16.8%
to $6.25 billion, which is nearly double the American investment to Korea of $3.6 billion.
For example, a leading international law firm based here in New York, Clearly Gottlieb Steen & Hamilton LLP, opened its Seoul office on October 15, 2012. The firm has 10 associates in Korean practice. By establishing an office in Seoul, the firm can serve both its Korea-based clients, as well as clients outside the region doing business there, more efficiently and effectively.
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Conversely, exposure to foreign competition has provided Korean domestic firms a valuable impetus to adapt to the international norms and further gain competitiveness in the global market.
The provisions of the “comprehensive and high standard” TPP is – in fact – built upon the KORUS FTA, which is in its fourth year of implementation.
As such, a myriad of accumulated case studies and the know-how for implementing the KORUS FTA will serve to bring about TPP’s effective implementation in the future.
With Korea’s robust gains through trade agreements, especially with the KORUS FTA, Japan must have felt it was at a disadvantaged position. Therefore, combined with a sense of urgency to revitalize its economy, Japan decided to join the TPP, which would provide its economy the needed stimulus, as reported by the Congressional Research Service (CRS).
Asian Infrastructure Investment Bank (AIIB)
One more issue that I’d like to discuss this afternoon is that of another avenue, through which to engage China into a rule-based economic order. And AIIB is such a path.
On March 26th, Korea announced its decision to join the Asian Infrastructure Investment Bank (or AIIB).
Before joining, Seoul was in close consultation with Washington.
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Korea shares with the US the belief that AIIB should become a good international development bank with transparent governance and strong financial, social and environmental safeguards.
Korea has been working closely with the US and Australia to influence AIIB to adopt best practices and transparent governance. As a result, AIIB’s governance has improved and is still improving, as it was once criticized for being “woefully short on detail,” to quote from the WSJ.
Korea will continue such efforts for AIIB with likeminded member countries such as Britain, France, Germany and Australia. We will be one of the active driving forces for the development bank to emerge as a good multilateral institution with high standards of governance, transparency and addressing development needs. This way, it would allow China to be engaged in a rule-based economic order.
Conclusion
With all that’s been said so far – America’s rebalance to Asia, Korea-US-Japan relations, TPP, KORUS FTA, and AIIB – the conclusion is clear: Korea-US partnership is the key to building a lasting peace and future prosperity in the region.
As mentioned before, KORUS FTA was – to some extent – the inspiration and basis for TPP. The Korea-US security alliance still serves as the linchpin of peace in Asia. In this sense, Korea-US partnership is the essential ingredient in America’s rebalancing to Asia.
Going back to the initial question: how to engage China into a rule-based partnership in Asia?
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Many policy makers and wonks are suspicious of China’s rise, saying that it is a destabilizing force in the region.
But, if there existed a high quality framework of trade, then as President Obama said,
“China is going to have to adapt to this set of trade rules that we’ve established.” In the same vein, improving the multilateral institution, namely the AIIB, to a higher standard of international norm would naturally lead China to become a partner, rather than a rival.
In that event, instead of being a source of tension, America’s rebalance to Asia could serve as the backbone of confidence building initiative that could ease tensions and bring about a closer integration of the region’s economy. This way, with your help, we can usher in a new era of peace and prosperity in Asia-Pacific and the world; and the
enduring and strong partnership between Korea and the United States will serve that goal.
Thank you; and I’d like to open the floor for questions.
