The Peninsula

Korea and APEC: Match Made in a Globalized World

By Sarah K. Yun

As leaders of the Asia-Pacific nations gathered for the 20^th Asia-Pacific Economic Cooperation (APEC) Leaders’ Meeting in Vladivostok, Russia on September 8-9, the ongoing effects of the euro crisis and global financial crisis added urgency to their efforts to increase regional economic growth and give APEC a leading role in the global economy.   With multilateral organizations such as APEC increasing in importance as the international system shifts from the post-Cold War to an increasingly globalized economic and political structure, Korea is taking an active role in the new shift as its national interests align with APEC.

APEC was created in 1989 in response to the growing interdependence in the Asia-Pacific region and as a counterweight to the existing euro-centric multilateral framework. The 21 member economies work towards economic growth through coordinated but non-binding liberalization and deregulation of trade and investment. Interestingly, the concrete proposal for the creation of APEC came from the Korea-Australian leaders’ joint communiqué in 1989. In the succeeding years, the Bogor Declaration of 1994 would further articulate APEC’s vision for free trade and investment in the Asia-Pacific region among developed countries by 2010 and developing countries by 2020. Although APEC has been criticized for being a “talk shop”, it accounts for approximately 40% of the world population, 54% of economic output, and 44% of international trade.

For its part, Korea has been involved in regional efforts to foster intergovernmental regional cooperation since the 1960s when it was the principal sponsor of the Asia Pacific Council, which eventually disbanded. Initially, Korea’s main interest in participating in the regional framework was less about economic benefits than about encouraging political association and integration within the region, which could help to lend legitimacy to Korea after the Japanese occupation, the Cold War, and the Korean War.

By engaging with other small and medium-sized countries, Korea began to gain more leverage in the international system. Since then, Korea has skillfully managed to overcome the reputation of a closed and restrictive market with its robust trade, investment, and green growth policies. Korea has supported APEC’s principle of open regionalism and made significant progress towards the Bogor goals through implementation of the Individual Action plan (IAPs) including the removal of barriers to trade and investment in many areas, policy reforms by amending laws and regulations, and enhanced transparency in its market.

Although this year’s APEC summit began with looming concerns over territorial disputes and regional stability in light of a series of leadership changes in the region, observers generally saw the results as positive. The four main items on the agenda were trade and investment liberalization, strengthening food security, establishing reliable supply chains, and cooperation to foster innovative growth. Some of the tangible outcomes include the renewal of APEC’s commitment to resist all forms of protectionist trade policies and cut tariffs on environment products by 5% by 2015. Member economies also specified a list of 54 environmental products subject to tariff cuts to include solar panels, gas and wind turbines, wastewater treatment technologies, air pollution control technologies, waste treatment technologies, and environmental monitoring and assessment equipment, of which nine categories apply to Korea’s products and services. A consensus was also reached to add no new protectionist policies in the name of green growth, encourage internal infrastructure through public private partnership, strengthen energy and food security.

Korea’s presence in the 2012 APEC was noteworthy for its balance between the economic agenda and political diplomacy. President Lee Myung-bak’s opening remarks during the second session emphasized the need to abolish restrictions on food exports. He urged member economies to stabilize food prices, reduce biofuel production, bolster agricultural production, and enhance transparency in food trade. President Lee also drew attention to Korea’s green growth initiative and robust trade policies.

Alongside Korea’s efforts in the formal APEC sessions, Korea also engaged in active sideline diplomacy. President Lee held official bilateral meetings with Russian President Vladimir Putin, Vietnamese President Truong Tran Sang, and U.S. Secretary of State Hillary Clinton. Lee also held pull-aside meetings with Chinese President Hu Jintao and Japanese Prime Minister Yoshihiko Noda. South Korean Foreign Minister Kim Sung-hwan also held an official meeting with the Thai Foreign Minister Surapong Tovichakchaikul and pull-side meeting with Japanese Foreign Minister Koichiro Gemba. One outcome of the sessions was to diffuse some of the diplomatic and territorial tensions in the region while strengthening economic diplomacy and cooperation. Korean private sector leaders who participated in the APEC CEO Summit also engaged in active economic diplomacy and agreements.

Korea’s work through APEC is part of its larger commitment to the regional integrative process and economic growth. As the framework of regionalism shifts towards the global economic structure and the co-existence of developed and developing countries, Korea can play an important role as a middle power.  APEC is just one example. The two share a desire for the expansion of economic liberalization and efforts to promote sustainable green growth.  This provides Korea with an opportunity to take an increasing role in encouraging APEC members to develop and actualize their own green initiatives in line with APEC’s Green Initiative. President Lee’s visit to Greenland and Norway immediately after the APEC summit is an indication of his policy priorities on green growth and the economic growth of middle powers, which is shared by current opposition presidential candidate. APEC’s framework for regional and multilateral trade is also consistent with Korea’s trade policies. Where APEC lacks formal leadership, Korea can fill an important gap and play a mediating role between developing and developed countries, as well as sub-regions.

Furthermore, Korea can play an important role in APEC through the introduction of innovative programs as a benchmark for other APEC members. An example of this is Korea’s program to help their own SMEs establish branch offices and factories in developing APEC economies, while transferring technology and management tools to their destination. However, the key would be to establish sustainable projects that are not one-time based.

The 2012 APEC Summit in Russia was a success for the host, the organization, and Korea. As APEC enters its third decade of existence and member countries increasingly align their interests with APEC’s mission, Korea will continue to play an important role of providing benchmarks and innovation. Furthermore, Korea can find a leadership niche as a developing and innovation model as APEC begins to shed its reputation as a “talk shop”. Not only would this benefit APEC, but Korea would also benefit as it seeks greater economic liberalization throughout the region.

Sarah K. Yun is the Director of Public Affairs and Regional Issues for the Korea Economic Institute. The views expressed here are her own.

Photo from Jonathan Davis’ photo stream on flickr Creative Commons.