South Korea, Asean pledge to boost trade as ‘indispensable friends’ in face of protectionism

Park Chan-kyong

South Korea and the Asean countries on Tuesday vowed to redouble efforts to expand economic cooperation despite the global wave of protectionism, promising to boost two-way trade to US$200 billion next year from the current US$160 billion.

The pledge, made as President Moon Jae-in and leaders of 10 countries in the Association of Southeast Asian Nations wrapped up a summit in Busan to mark 30 years of ties, comes two years after Seoul launched its New Southern Policy to prioritise relations with the region.

The commitment also comes amid disputes between South Korea and Japan over trade and history that threaten to slow growth further as the two East Asian nations feel the pinch from the US-China tariff war.

At the start of the summit on Monday, Moon cheered how his country and the bloc had seen “trade, investment and people-to-people exchanges significantly increase – 20 times, 70 times and 40 times, respectively.

Leaders of the 11 nations met in the South Korean coastal city of Busan. Photo: Alamy Stock Photo

“We have now become indispensable friends to each other, and together we dream new dreams and turn each into a reality one by one,” he said.

His country was Asean’s fifth largest trading partner and fifth biggest source of foreign direct investment in 2018, when their two-way trade volume hit US$160 billion, up 4.4 per cent. South Korea accounted for 5.7 per cent of Asean’s merchandise trade in the year.

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The bloc welcomed Seoul’s commitment to increase people-to-people exchanges to 15 million by 2020, up from 11.2 million last year. Nine million South Koreans visited Asean countries in 2018.

The northeast Asian country has promised to improve visa systems for Asean travellers and explore working holidays agreements.

A statement from Moon and the summit’s co-chair, Thai Prime Minister Prayuth Chan-ocha, urged North Korea to refrain from further missile tests amid a lack of progress on resuming dialogue with Washington on disarming the nuclear-armed hermit state.

It also reaffirmed “the importance of maintaining and promoting peace, security, stability, safety and freedom of navigation in and overflight above the South China Sea”.

Thailand is the outgoing chair of the bloc and will next year hand over to Vietnam – one of several states contesting China’s claims to large swathes of the energy-rich waters.

The leaders of South Korea and Asean countries are introduced to a Hyundai hydrogen fuel cell electric car on Tuesday. Photo: EPA-EFE

Beijing recently protested against the presence of US navy ships in the region and warned them to keep away, exacerbating a flashpoint between the world’s two largest economies as they work through their protracted trade war.

Supalak Ganjanakhundee, a researcher at Singapore’s ISEAS-Yusof Ishak Institute, said South Korea aimed to strengthen ties with Asean countries at a time when the continuing disputes with Tokyo lowered its prospects of taking part in America’s Indo-Pacific Strategy – a game plan to counter the rise of China – along with Japan, Australia, India and other major democracies in the region.

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For Asean, greater engagement with South Korea could help the bloc diversify its economic interests away from China. Termsak Chalermpalanupap, another analyst at the ISEAS-Yusof Ishak Institute, said South Korea and Asean members were “middle powers” that shared similar strategic interests in the Asia-Pacific region.

“For example, they do not want conflict or confrontation between the US and China – they do not want a ‘new cold war’. At the same time they do want to promote dialogue and cooperation – they want to defend the World Trade Organisation and promote economic multilateralism,” he said.

The summit’s co-chair, Thai Prime Minister Prayuth Chan-ocha, and South Korean President Moon Jae-in speak on Tuesday. Photo: YNA/DPA

A number of memorandums of understanding and joint statements were signed at the summit to bolster bilateral economic and technical cooperation.

They included a preliminary agreement for Korean carmaker Hyundai Motor to build a US$1.55 billion manufacturing plant just outside Jakarta, set to open in the second half of 2021.

A joint statement was signed with Indonesia declaring a conclusion to negotiations on lifting tariffs on South Korean car parts, steel and petrochemical products. Taxes on imports of Indonesian oil, sugar and chemicals will also be wiped out.

Seoul signed a joint statement with the Philippines acknowledging early achievements in their negotiations on a bilateral free-trade agreement. The two sides vowed to wrap up the talks by the first half of next year.

The Philippines will open its markets wider to car parts, medicines and chemical products from South Korea, while Seoul will cut tariffs on imports of Philippine bananas, clothes and car airbags.

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