Korea is reaching out to the West. Just when the West is experiencing hard times, with persisting economic troubles stemming from the late-2000s recession, it is noteworthy to point out that Korea is betting on its future. The signing of free trade agreements with the EU and the U.S. is a landmark step toward South Korea’s further integration within the global economy and a clear strategy aimed at bringing relations with the West to the next level. This is mainly for three reasons, the first one being economic growth.

The EU-Korea FTA, which came into force July 1, 2011, is estimated to bring with it an increase in South Korean exports of almost 5 percent and an increase of EU exports of 1.4 percent along with the creation of between 300,000 and 600,000 estimated jobs. According to the European Commission, EU-South Korea bilateral trade is expected to more than double in the next 20 years compared to a scenario without the agreement.

On March 15, 2012 will come into force the agreement reached with the U.S., which is expected to increase South Korean GDP between 0.38 percent and 2.41 percent, whereas the U.S. economy should grow 0.02-0.2 percent. U.S. exports to South Korea will rise by half and U.S. imports from South Korea will rise by one-third. The IMF predicts that Korea’s GDP is going to post 4 percent average growth over the next five years ― this without taking into account the economic effect generated by the two deals.

Secondly, Korea is reaching out to the West to improve its competitiveness, which has become a national trademark. Korea seems to well understand the importance of maximizing its competitiveness as a means to foster economic growth.

As professor John West explains in his article “Korea and Japan: A Tale of Two countries,” after the 1997 financial crisis Korea started to undertake a wide array of reforms that brought about notable achievements such as consistent progress on fighting bribery and corruption and enabling foreign companies to better operate in the country ― in 2011 Korea entered the top 10 in the World Bank’s Doing Business Report.

A major, recent driver of reforms has been the Presidential Council on National Competitiveness, which well represents the nation’s focus on competitiveness. Founded and promoted by President Lee Myung-bak in 2008, the PCNC has four main missions: bringing about regulatory reforms, innovation within the public sector, investment promotion and legal and institutional advancement. The PCNC’s ultimate goal is “expanding the potential growth rate to 7 percent by promoting investment and enhancing economy-wide efficiency.” This goal is to be reached partly through the opening of the domestic market to foreign products and companies.

The third reason is Korea’s mistrust of China. China’s growing regional influence is not particularly welcomed in Korea, a country extremely proud of its independence and its current economic achievements. Trade relations with China are booming, with Beijing being already Seoul’s largest trading partner ― in 2011 bilateral trade reached $220 billion, more than Korea’s trade with the United States and Japan combined.

Certainly China’s economic bonanza is good news for Korea. However, Seoul clearly seems afraid of growing too dependant on China in the long run. The more you depend economically on China, the more Beijing is going to raise its political bargaining power, Seoul is probably thinking. Just look at the China-North Korea relations and you’ll understand Seoul’s argument. Let’s remember that Korea and China were enemies during the Korean War and established official diplomatic relations just 20 years ago and that Beijing is still Pyongyang’s closest ally.

That is why Korean leaders are cultivating ties with whom they consider reliable partners ― Washington and Brussels. Both the FTAs have been signed after years of harsh and complicated negotiations ― Seoul’s determination and patience has eventually paid off. Why not sign an FTA with Japan, too? Mainly because Tokyo is not (yet) a reliable partner in Korea’s eyes. Seoul is currently engaged in FTA negotiations with ASEAN, Canada, Mexico, India and Australia.

Korea’s message is clear: China is and must be just one of the drivers of Korea’s economy. Addressing the U.S. Congress last October, Korea’s President Lee Myung-bak stated: “Our free trade agreement has significance because it will be a force for stability, because lasting stability, again, depends on economic opportunity being open and robust. Our relationship can be the catalyst that generates growth and stability all along the Pacific Rim. And, in doing so, it will make clear how fully our fates are connected. More than ever, Korea is looking beyond the horizon.”

At times when multilateralism is experiencing a stalemate, with the WTO Doha round of talks going nowhere, Korea’s bilateral free trade strategy is a winner. Free trade agreements not only hold the potential to improve trade flows, they enhance a country’s competiveness ― which is a Korean imperative. What is more, increased economic relations with the North-American giant and the European economic bloc serve the purpose of downplaying fears of an ever greater dependency on China.

By Emanuele Schibotto

Emanuele Schibotto is a Ph.D. candidate in geoeconomics at the Guglielmo Marconi University in Rome. He also is coordinator of Equilibri.net, an Italian think tank and online magazine on geopolitics and international relations. ― Ed.