Forging robust security and economic alliances with the United States and Japan is crucial for South Korea to embrace a reshaped global geopolitical paradigm, said Jun Kwang-woo, chairman of the Institute for Global Economics.
“The trilateral allies must bolster their economic cooperation and pursue shared strategic priorities,” to deal with “the looming global geo-economic challenges, accompanied by supply chain disruptions and an energy crisis, result from the post-pandemic paradigm shifts and Russia's invasion of Ukraine,” Jun said during the “Alliance Plus” forum hosted by Herald Corp. on Wednesday.
During his thematic session titled "Global Geo-economic Challenges and Response Strategies," he picked cross-border trade as one of the key areas requiring an enhanced economic alliance among the three countries.
“This can be achieved by reducing trade barriers such as tariffs and quotas, promoting investment by creating an enabling environment and supporting small and medium-sized enterprises to enhance their capacity and survivability in global trade,” he said.
Promoting investment in innovation and infrastructure is the area where Korea, the US and Japan could put collective effort, according to Jun, who was also the founding chairman of the Financial Services Commission.
“The COVID-19 pandemic presented an unprecedented challenge to global production and distribution systems. It is crucial to adapt policies intelligently and manage global supply chains more effectively based on the lessons learned,” Jun said.
These disruptions concern strategically important high-tech sectors such as semiconductors, electric vehicle batteries, and artificial intelligence industries where the three nations could make joint efforts for investment.
He said the US’ landmark initiatives aimed at fostering investment in strategically vital high-tech areas and reducing dependence on China such as the CHIPS and Science Act and the Inflation Reduction Act will “substantially contribute to enhancing the resilience and reliability of global supply chains and mitigating geo-economic risks.”
But such moves could have transitional effects on Korea’s high-tech enterprises, such as leading semiconductor manufacturers that have operated in China for decades.
“A decisive yet cautious approach to transition management is essential for the benefit of all allies, with the aim of achieving a soft landing and mitigating adverse effects,” he said.