Tag Archive | "US – ROK Relations"

The Challenge of Managing Relations with North Korea for the Moon Administration

This is the eighth in a series of blogs looking at South Korea’s foreign relations for the new Korean administration. The series also includes blogs on relations with China , the United States, Japan, Russia, the European UnionASEANAfrica, the Middle East, and Latin America

By Troy Stangarone

As the new Moon Jae-in administration begins to put its personnel in place, one of the more challenging international relations to manage will be North Korea. In the strictest sense, with the closure of the Kaesong Industrial Complex, South Korea no longer has relations with North Korea, though this is something that the Moon administration hopes to change. However, even if dialogue or engagement with North Korea restarts under the Moon administration, handling relations with Pyongyang will be complicated by the need to manage relations with other powers in the region as well.

Developing relations with North Korea is complicated, to say the least. Since Roh Moo-hyun left office in 2008, when Moon was his chief of staff, North Korea has conducted four additional nuclear tests and numerous missile tests as it works to advance its nuclear program. It also sank the South Korean naval ship Cheonan and shelled Yeonpyeong island resulting in the deaths of 48 South Korean military personnel and 2 civilians in total.

As a result of these actions the international community and South Korea have placed a range of sanctions on North Korea rolling back the economic interactions that were expanded under the Sunshine Policy. These include the May 24 measures which ended trade outside of the Kaesong Industrial Complex, limited expansion within Kaesong, halted aid, and forbid North Korean ships sailing in South Korean waters. More recent measures closed the Kaesong Industrial Complex and banned ships that docked in North Korea from traveling to South Korea for a year.

Expanding ties with North Korea would require rolling back these measures in part or finding ways to work around them, as well as ensuring that any new activities were in compliance with United Nations sanctions. Under the Park Geun-hye administration, South Korea faced these same challenges and encouraged firms to invest in Russian rail companies to help further the administration’s Eurasia Initiative.

As long as North Korea continues to conduct weapons tests, the scope for creative avenues to engage the North will continue to narrow. North Korea has become significantly more aggressive in its testing patterns under Kim Jong-un and seems to be committed to completing its development process.

Engaging with North Korea also requires a willing partner, something that it is unclear is available in Pyongyang. Park Geun-hye came into office with the policy of Trustpolitik, hoping to slowly build trust between North and South Korea on humanitarian issues such as family reunions, but was quickly met with a nuclear test, a “space launch,” and the North Korean withdrawal of its workers from Kaesong. Ultimately, North Korea’s behavior pushed her away from a policy of engagement. President Barack Obama was also originally willing to engage North Korea having expressed an openness in his 2009 inaugural address and shortly after Kim Jong-un came to power with the Leap Day Agreement, but was rebuffed on both occasions by North Korean provocations. Ultimately, the Obama administration settled for a nuclear deal with Iran and reopening relations Myanmar and Cuba instead of continuing to work on cutting a deal with North Korea.

It seems as though North Korea intends to provide little deference to Moon despite his stated desire to engage, having tested a ballistic missile capable of hitting Guam and Japan five days after Moon came into office. However, the test more likely was designed to send a message to China as Xi Jinping was set to give a major speech at his One Belt, One Road conference with 29 world leaders looking on only hours after the test. The proximity to Moon’s inauguration may merely have been coincidental in light of the larger Chinese target.

Further complicating efforts to manage relations with Pyongyang is Seoul’s need to manage relations with the United States, China, and other powers in the region and coordinate policies. While no international relationship is truly independent, South Korea’s approach towards North Korea is perhaps more constrained by the policies of other countries than other policy areas.

Poor relations with Washington or Beijing potentially hinder efforts by Seoul to directly engage Pyongyang, as China has the ability to undermine South Korean efforts directly and Pyongyang has consistently expressed a preference for bilateral talks with the United States. Seoul will need to avoid any outcome where it is estranged from Washington, which potentially encourages the United States to seek solutions not involving South Korea. Tacking too far away from Washington could result in outcomes such as a preemptive military strike on North Korean nuclear installations that Seoul would want to avoid.

Prior experience with the Sunshine policy also demonstrates that when Washington isn’t on board, the policy is less effective. If Seoul wants engagement to be viable, it will need to find a way to weave its strategy into the United States’ policy of maximum pressure and engagement, while also bringing China along on the broader strategy, which is also one that will require gaining Russian and Japanese support.

Managing relations with North Korea will require a delicate balance by South Korea. It will need to find space within the sanctions regime to develop engagement, but also need a willing partner in Pyongyang to make any strategy of engagement viable. At the same time, it will need to manage the interests of the other parties in the region. If a South Korean policy of engagement were to place China under greater pressure from the United States, Seoul may find an unwilling partner in Beijing as its economic and geostrategic interests are challenged. At the same time, Seoul will need to develop a policy that the United States can embrace rather than work against. Alliance management and North Korea policy has always worked best when Seoul and Washington are on the same page and that is unlikely to change in the near future.

Troy Stangarone is the Senior Director for Congressional Affairs at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from Prachatai’s photostream on flickr Creative Commons.

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Challenges in Relations with the U.S. under the Moon Administration

This is the seventh in a series of blogs looking at South Korea’s foreign relations for the new Korean administration. The series also includes blogs on relations with North KoreaChina, Japan, Russia, the European Union, ASEANAfrica, the Middle East, and Latin America

By Kyle Ferrier

The United States is a crucial security and economic partner for South Korea. Not only is the U.S. treaty obligated to defend South Korea, but 28,500 American troops are stationed below the DMZ. Should an armed conflict arise on the peninsula Washington would assume operational control (OPCON) of South Korean forces. Since its implementation in March 2012, the KORUS FTA has helped to secure the U.S. as South Korea’s second largest trading partner, making it the cornerstone of the bilateral economic relationship. While the strength of these ties is built on a foundation of shared values transcending leadership transitions over the years, U.S. President Donald Trump has openly disputed fundamental aspects of the relationship. For the newly elected South Korean President Moon Jae-in, just as central to resolving the issues raised by Trump will be understanding his approach to foreign affairs.

Trump won the U.S. presidential election last November on a platform of radical change. In contrast to the mood of Obama’s campaign in 2008 which employed slogans such as “Hope” and “Yes We Can,” Trump’s “Make America Great Again” complemented his bleak portrayal of a broken American system abused by elites and foreign countries alike. Trump often put South Korea in his crosshairs, claiming they did not pay enough for U.S. troops stationed there—going so far as to suggest withdrawing military personnel in exchange for allowing Seoul to have nuclear weapons as a cost saving measure—and criticizing the KORUS FTA for destroying U.S. jobs.

Once elected, Trump was quick to reverse course on the alliance, assuring President Park of U.S. commitment just one day later. Since then South Korea has hosted a steady stream of senior U.S. officials, including Defense Secretary Jim Matthis, Secretary of State Rex Tillerson, Vice President Mike Pence, and most recently CIA Director Mike Pompeo. Although these visits are an extension of initial efforts to reassure Seoul, they are contrasted by Trump’s “disruptive” approach to foreign policy, which draws on his campaign rhetoric, prioritizes his interpretation of American interests, and is underwritten by unpredictability. The disruptive approach is seemingly being applied to adversary and ally alike, which directly impacts South Korea through U.S. policy on North Korea as well as issues of alliance management and bilateral trade.

The Trump administration has repeatedly stated Obama’s second term policy of “strategic patience” towards North Korea is dead, yet it may just be going by a different name. At the onset of his presidency, Trump was relatively quiet on North Korea, with some hoping this might be interpreted as a willingness to talk with Kim Jong-un. However, since mid-March the administration has taken a more forceful stance. Secretary Matthis first announced the end of “strategic patience” on his trip to Seoul. Soon after, multiple senior officials and even Trump himself claimed military options were back on the table, particularly a pre-emptive strike against North Korea. Then, after a two-month policy review, the administration released its agenda of “maximum pressure and engagement,” which some have noted is remarkably similar to “strategic patience.” Both are centered on pressuring Beijing to influence Pyongyang and waiting for credible indications from the North that they are willing to reduce their illicit weapons programs. Despite posturing otherwise, security realities in Northeast Asia look to be constraining Trump to largely continuing Obama’s approach, at least for the time being, which is more than can be said for alliance management and trade relations.

Although Trump seemed to be shying away from campaign calls for Seoul to pay more for U.S. military presence on the peninsula, recent comments raise new questions, particularly for an upcoming milestone in the alliance. Trump’s call for South Korea to pay $1 billion for the THAAD missile defense system in an April 28 interview was refuted by National Security Advisor H.R. McMaster only a few days later. However, it was not enough to erase the negative impact on the public discourse in South Korea, unnecessarily complicating Moon’s promised domestic review of THAAD’s deployment. The president’s comments also raise questions over how he may attempt to shape the renewal of the Special Measures Agreement (SMA) that is set to expire at the end of this year, which governs the burden sharing arrangement. It is certainly conceivable that Trump may influence SMA negotiations by similarly calling for Seoul to contribute more to the alliance, including the potential to leverage OPCON.

The last major challenge for the Moon administration will be addressing Trump’s criticism of the KORUS FTA. Trump has repeatedly attacked the trade deal, citing the U.S. bilateral trade deficit with South Korea, though it is still unclear if he will pursue the actions he has espoused. KORUS was one of only two trade agreements singled out for not meeting expectations in The President’s Trade Policy Agenda released by USTR, the other being NAFTA. Trump recently suggested that he might terminate the agreement if South Korea was not open to renegotiations, similar to the approach he has taken with NAFTA.

Whereas the relevant senior U.S. officials have attempted to counter Trump’s disruptive approach to North Korea and the alliance, competing coalitions within the administration on trade further obscures how U.S. policy might be carried out. On the one hand, there are those who favor policies more traditionally associated with protectionism: Secretary of Commerce Wilbur Ross, Director of the new Office of Trade and Manufacturing Policy Peter Navarro, and USTR nominee Robert Lighthizer. And on the other are those who support greater global engagement: Director of the National Trade Council Gary Cohn and Senior Advisor to the President Jared Kushner. Although it is not yet clear how the U.S. will seek to pursue new concerns over KORUS—despite generally favorable reports by USTR and the US International Trade Commission released in the past year—the first major hurdle will come at the end of June when Commerce and USTR are expected to release their findings from a major review of all bilateral trading relationships.

How soon the Moon administration attempts to address these challenges with the United States will significantly dictate their potential impact on U.S.-South Korea relations. Whether it is growing pains or a more structural issue, the Trump administration’s implementation of foreign policy so far has negatively influenced South Korean public opinion. While the newly adopted policy of “maximum pressure and engagement” is remarkably similar to “strategic patience,” the process of getting there raised serious questions about U.S. credibility through concerns such as the location of the USS Carl Vinson and the perception that Washington would pre-emptively strike North Korea without consent from Seoul. Efforts by senior U.S. officials to smooth over some of Trump’s more controversial remarks have helped to stabilize relations, but the U.S. loses face each time. Even so, there are still contentious remarks that have not been sufficiently addressed.

Recent polling shows Trump’s popularity in Korea has sharply declined—falling below China’s Xi Jinping who is punishing South Koreans over THAAD. Koreans still view the U.S. favorably, yet it is unclear how long this duality can be sustained. A poor public opinion of the United States would severely constrain Moon’s ability to successfully coordinate the issues Trump has raised, which should make early and direct dialogue with his counterpart in Washington a high priority.

Kyle Ferrier is the Director of Academic Affairs and Research at the Korea Economic Institute of America. The views expressed here are the author’s alone.

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Seoul, Washington, and Pyongyang: Delicate Diplomatic Triangle for President Moon Jae-in

By Robert R. King

The campaign is over; ballots have been cast; the result is clear—Moon Jae-in will be in the Blue House within a few days.

The most critical foreign affairs issue on the agenda of the new President is the South’s relationship with North Korea, and entwined with that issue is its relationship with the United States.  Though the new American President passed his first 100 days in office just a few days ago, there is still considerable uncertainty about the direction of American foreign policy, and one of the most sensitive issues facing the United States is North Korea and its nuclear ambitions.  The relationship with North Korea is the most critical question for the South and its new president, and because of the military ties with Washington, how to deal with the North will also be the key issue in relations with Washington.

President Moon begins his contacts with the new American president at something of a disadvantage.  When President Trump moved into the White House, South Korea was in the midst of the impeachment of Moon’s elected predecessor Park Geun-hye.  As a result, Trump met with Japan’s Prime Minister during the transition (his first post-election meeting with a foreign leader) and again after his inauguration in Washington and at Mar-a-Lago.  The American President also met in early April with Chinese President Xi Jingping.  The American Secretary of Defense and Secretary of State have both met with counterparts in Seoul in recognition of the importance of Korea in American policy, but the chemistry and content of bond between the two presidents has yet to emerge.

It is also not clear where there may be differences on the North between the two leaders.  During the campaign, Moon has expressed the desire for engagement with the North and better relations.  Trump has expressed serious concern about North Korea’s nuclear and missile programs, but he has also expressed a willingness to meet directly with the North’s leader Kim Jong-un.  His first statement was made early in his tenure, but he repeated it again just last week.  Trump told Bloomberg News just a week ago that he would meet with Kim Jong-un under the right circumstances—“If it would be appropriate for me to meet with him, I would absolutely; I would be honored to do it.  If it’s under the, again, under the right circumstances. But I would do that.”

South Korea’s new president, who was still a candidate ten days ago, cited this statement by America’s President and concluded that Trump is “more reasonable than perceived” and suggested that he and Trump were taking a similar position in favor of bringing the North back to negotiations on the nuclear issue.  It remains to be seen, however, how close the two presidents are on the details of how best to bring the North into denuclearization negotiations.

Another potentially serious issue that could create problems between the two presidents and their countries with regard to policy toward the North is THAAD, the U.S. defensive missile system now deployed in the South as agreed to by Moon’s predecessor.  The U.S. rushed to get the system in place before the election, although Moon expressed concerns about the deployment and the belief that the next government should review the decision, his political and ideological allies were vocally opposed to the deployment throughout the election.  This will likely be a serious point of contention that could create difficulties for relations between the U.S. and South Korea.

It is made more complex by the fact that China has been particularly opposed to THAAD and has taken steps to make the deployment more costly for the South by significantly cutting back Chinese tourism to South Korea—a major source of income and consumer goods sales in the South—as well as boycotting retail outlets in China owned by the South Korean conglomerate which sold land to the South Korean government on which THAAD is based.  THAAD is an issue that has serious security and domestic political implications for President Moon, but one of the most difficult will be the effect the issue has on the American-South Korea relationship.

Making the issue even more awkward and controversial was President Trump’s pronouncement last week that he expected the South to pay the $1 billion cost for the missile defense system.  His comment came less than ten days before the South Korean election, and was certainly not welcomed by pro-U.S. presidential candidates in the South.  Trump’s statement calling for the South to pay for THAAD was linked to his call for a renegotiation of the U.S.-South Korea trade agreement (KORUS).  The U.S. National Security Advisor, General McMasters, however, reassured his counterpart in Seoul that the U.S. would keep its previous commitment on the missile system.

The bottom line is that uncertainty and shifting policy signals from the Oval Office will not make the task of the new South Korean president an easy one.  He will likely have his own learning-curve and unintended missteps, which will make his task harder.  The relationship between Seoul and Washington is critically important for both countries, however.  It will take a great deal of maturity and understanding on the part of both presidents to deal with North Korea.  There is a great deal at stake for all sides.

 

Robert R. King is a Non-Resident Fellow at the Korea Economic Institute of America.   He is former U.S. Special Envoy for North Korea Human Rights.  The views expressed here are his own.

Photo from Morning Calm Weekly Newspaper Installation Management Command, U.S. Army’s photostream on flickr Creative Commons.

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Prospects for U.S.-Korea Economic Relations under New Administrations in Seoul and Washington

By Phil Eskeland

In 2017, both the Republic of Korea (ROK) and the United States face various challenges and opportunities in the growing economic relationship.  Korea is now America’s 6th largest trading partner, ahead of the United Kingdom and France.  As a nation that once was a major recipient of U.S. foreign aid, South Korea has rapidly advanced to become the world’s 13th largest economy, ahead of Canada and Spain.  However, these achievements are not locked in forever.  As the new ROK and U.S. administrations interact and deal with each other, both sides must avoid “unforced errors” and cooperate with each other as much as possible to confront domestic and international trends that place impediments on both economies, such as stagnant wage growth, aging population, mismatched workforce, and the siren song of trade protectionism.

The first major challenge is establishing an accurate analysis of the Korea-U.S. Free Trade Agreement (KORUS FTA).  The agreement’s success or failure should not be measured by just a single metric of the merchandise trade deficit, which parenthetically decreased in 2016, but on a comprehensive review of all of its effects.

  1. Total trade volume (imports and exports) between the two countries has increased since pre-KORUS levels (2011).  In fact, the most recent data from the Commerce Department shows that the U.S. exported a record level of manufactured goods and agricultural products to Korea for the month of March 2017 at $4.36 billion, the highest level since March 2014.
  2. The United States continues to break records in the export of services to Korea, producing the highest trade surplus ever for the U.S. in 2016.  This trade surplus reduced the overall goods and services trade deficit between the two countries to $17 billion.  As a result, Korea’s bilateral trade deficit with the U.S. is ranked well below other nations, including China, Germany, Mexico, Japan, and even Italy.
  3. According to the Commerce Department, U.S. exports to Korea have led to an increase of 87,000 jobs in the United States between 2009 and 2015, including 55,000 jobs in the goods sector, which pay 16 percent more on average than other employment.
  4. Korea now represents the 5th fastest-growing source of Foreign Direct Investment (FDI) into the United States, employing over 45,000 workers in the U.S. earning an average compensation package of $92,000 a year.
  5. Because U.S. exports of items covered by KORUS have increased by 18 percent since 2011, the agreement has helped to reduce the merchandise trade deficit by nearly $16 billion.

Thus, the KORUS FTA meets every metric of a successful trade agreement as outlined by the Trump Administration.  In fact, if reducing the trade deficit is the main concern, then the Trump Administration should focus their attention on other countries first before Korea.

Nonetheless, there is always room for improvement.  The KORUS FTA has a binational committee process to iron out differences in implementing the agreement.  This has greatly helped resolve numerous thorny issues without having to go through the difficult process of amending KORUS.  For example, clarifying the rules of origin on orange juice helped to dramatically increase sales to Korea, giving a boost to Florida citrus growers and producers at a critical moment when the U.S. market is declining.  In addition, Donald Trump won the Sunshine State – a key “swing” state with the most Electoral College votes – in the last presidential election.  However, both sides should avoid unforced errors by either scrapping the agreement or refusing to negotiate.  If KORUS is scrapped, hard-won gains for many U.S. exporters, including Florida orange juice producers, would vanish.  While KORUS is relatively new, it could be updated in a few areas, such as in intellectual property and e-commerce, though preferably through supplemental side agreements to avoid re-opening up the entire text.  The Trump Administration could lift the relevant IP and e-commerce sections from the now defunct Trans Pacific Partnership (TPP) agreement and offer to add these provisions to KORUS.

Second, international monetary policy could be another challenge to the U.S.-Korea relationship.  Every six months, the U.S. Treasury produces a report that identifies potential currency manipulators if three conditions are met:  (1) if there is a significant bilateral trade surplus with the United States; (2) if there is a material current account surplus; and (3) if the nation has engaged in persistent one-sided intervention in the foreign exchange market.  While Treasury did not identify any trading partner as a currency manipulator in its most recent report, the department included six countries, including Korea, on its monitoring list.  Some in the U.S. advocate adding provisions to prevent currency manipulation by other nations into trade agreements.  However, this challenge could represent an opportunity for Korea to be pro-active in responding to critics by being fully transparent in any governmental actions in foreign exchange operations.

Third, U.S. “fair trade” laws could also represent a challenge and opportunity in U.S.-Korea economic relations.  As with most U.S. administrations, the emphasis on trade during the first year in office usually focuses on enforcing existing agreements, not enacting new ones.  The Trump Administration is no different, but the prominence of trade enforcement has been amplified, particularly with the announcements of a series of reviews and investigations.  Both sides should take a step back to insure that enforcement actions do not lead misperceptions and unforced errors.  Korean companies should be extremely vigilant to make sure that they do not sell their product in the U.S. at a loss.  On the flip side, the Commerce Department should also be diligent to make sure it is not biased towards U.S. industry regarding allegations of unfair trade.  For example, the U.S. should implement the World Trade Organization (WTO) decision that disallows the use of “zeroing” (i.e., disregarding allegedly “non-dumped” sales in order to inflate dumping margins) to estimate higher tariff penalties.  Commerce should also consider the ramifications of a trade case for the entire U.S. economy because, ultimately, increased tariffs are another form of taxation that gets passed along to consumers in terms of higher prices.  As learned during the 2002/2003 steel tariff debate, many more American jobs at manufacturing facilities that used steel were at risk than in the steel industry as their final products were priced out of the marketplace.

Fourth, the two new administrations should give an opportunity for Korea to shine by highlighting and publicizing more of its FDI into the United States.  As stated above, Korea is now the 5th fastest growing source of FDI into the United States, which has accelerated since the implementation of the KORUS FTA.  If new investments are forthcoming, Korean companies would do well to let the American people and the Trump Administration know of this news to generate good will.

Finally, both countries would do well to continue its global partnership on numerous fronts:  cybersecurity, space, science, energy, environment, health security, Arctic cooperation, among others, that have enormous economic ramifications for both countries.  These important issues unfortunately do not receive the attention that they deserve because they are non-contentious, apolitical concerns.  Just because these initiatives were started by previous administrations should not mean that they are put to the wayside.  If anything, these issues, such as continuing the work of the U.S.-Korea Joint Committee on Science and Technology, should form the foundation for building further cooperation on economic and trade issues between the U.S. and the Republic of Korea.

 

Phil Eskeland is Executive Director for Operations and Policy at the Korea Economic Institute of America. The views expressed here are his own.

Photo from Saik Kim’s photostream on flickr Creative Commons.        

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Why This May Be South Korea’s Most Consequential Presidential Election

By Troy Stangarone

After months of protests across South Korea that culminated in the impeachment of President Park Geun-hye, South Koreans will go to the polls on May 9 to select her successor. Regardless of which candidate wins the election, the upcoming presidency may be the most significant for South Korea since the transition to the opposition with Kim Dae-jung cemented the democratic ideal of the transition of power and he was thrust into managing what is known in South Korea as the IMF crisis. The next administration will come into office at time when South Korea faces a wide array of economic, political, social, and security challenges.

The next president will need to begin by restoring confidence in government. The impeachment of President Park has divided society and exposed the continuing ties between government and business that have left a legacy of scandal trailing each administration. Prior scandals have not always directly involved the president, but the impeachment indicates a growing intolerance in South Korean society for ever too close of relations between the government and business. Addressing this issue will mean the next administration will need to consider reforms in both government and the chaebol.

If restoring confidence in government were not challenging enough, the next president will come into office at a time when South Korea faces critical domestic and international challenges that will need to be addressed. The South Korean economy in many ways is at a crossroads. After years of success as an exporting powerhouse, exports have been largely stagnant in recent years and South Korea faces increasing competition from lower wage countries such as China which have cut into key sectors for South Korea’s economy such as steel and shipbuilding, while becoming increasingly competitive in consumer electronics as well.

The challenges from international economic competition are coupled with domestic economic challenges. South Korea’s rate of economic growth has continued to decline and is expected to only by 2 percent in 2018. As the economy slows, income inequality has risen and will likely only continue to do so the economy becomes more oriented around services industries.

To begin addressing slowing economic growth and income inequality, the next administration will need to focus on structural reforms and labor market reform. South Korea needs structural reforms to address overcapacity in troubled areas such as steel, shipping, and ship building. At the same time, reforms are needed in the labor market as well. South Korea’s current two-tiered system made of a well-protected class of permanent workers and temporary workers who have few protections has created rigidities in the labor market that have limited job growth, especially for the young.

South Korea’s economic challenges have also created social challenges. As South Korean society rapidly ages, young South Koreans have seen their opportunities narrow even with one of the highest rates of college graduates in the world. While facing decade long highs in unemployment, young South Koreans face concerns about their future in a slowing economy and in a society that they see as constraining their opportunities.

If the young have seen increasing challenges, South Korea itself faces impending problems from its rapidly aging population. In the years ahead, over the next administration the working age population is expected to decline to just under 36 million and continue declining in the years after while the overall population will continue to grow until 2030. This means an increasing percentage of South Korea’s population will be in retirement with fewer workers to support them. This challenge is compounded by South Korea having the highest level of old age poverty in the OECD despite President Park having worked to improve the social safety net.

South Korea’s international relations may not be any less complex than its domestic challenges. On top of the agenda will be North Korea. While that will not have changed from prior administrations, Pyongyang has significantly advanced its nuclear weapon and missile programs under Kim Jong-un. As a result, the strategic situation could significantly change under the next administration should North Korea successfully deploy not only a nuclear deterrent but a viable second strike capability.

As a result, the administration may find its options for dealing with North Korea constrained, both by North Korea’s progress on its weapons programs and the policies of regional states. Relations with China have soured over the decision to deploy THAAD to defend against North Korean missiles, and China’s use of economic pressure may leave the next administration with a Scylla and Charybdis type dilemma of accepting significant economic harm or weakening South Korea’s defenses against North Korea.

Managing this situation will require close relations with the United States and Japan, both of which could be problematic if divisions over how to handle North Korea develop, or in the case of Japan historical issues complicate relations. While the Trump administration so far has been more conventional in its approach to North Korea than many foreign policy issues, Seoul and Washington will need to ensure that they do not diverge on how to handle North Korea. At the same time, there could be tension in the relationship, as the Trump administration is taking a harder position on trade and has indicated that it may review the KORUS FTA.

Whoever South Korea elects as president in May will face a more fluid domestic and international environment than prior South Korean presidents, one shaped by the impeachment and the need to enact reforms. While South Korea has gone through difficult economic times, such as the Asian Financial Crisis, or faced challenging relations with the United States or China, it is the degree and the number of challenges that South Korea may face over the next five years that make this election so consequential.

Troy Stangarone is the Senior Director for Congressional Affairs at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from sinano1000’s photostream on flickr Creative Commons.

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Korea Loses Spot as Third Largest Sender of Students to the U.S.

By Jenna Gibson

In 2016, South Korea officially dropped from the third largest source of international students in the United States to the fourth largest, now sitting behind China, India, and Saudi Arabia. The gap is small – Saudi Arabia sent just 280 more students than Korea in 2016 – but with the number of Korean students in the United States on a downward trend, that gap may widen in the coming years.

Korea has been the third largest source of students studying in the U.S. since 2002, when it surpassed Japan (which has since dropped to ninth place). Up until the late 2000s, the number of Koreans choosing to study in the United States was growing. But the number has dropped from a high of 75,065 in 2008 to 61,007 in 2016.

The number is still impressive – second place India is about 26 times bigger than Korea, but sends only 3 times as many students to study abroad in the U.S. The problem is that the number of Korean students choosing to come to the U.S. has been steadily dropping, a trend that is likely to continue.

A 2015 KEI blog attributed the decline in study abroad to economics – “With rising costs overseas and a stagnant economy at home, more Korean students are choosing to stay put.” Considering that since then youth unemployment has continued to set records, leading to widespread pessimism among young Koreans – it’s unsurprising that the downward trend has continued.

Student Enrollment Colored

Interestingly, the total number of Koreans studying abroad has actually held steady at around 220,000 since 2014. It’s the geographic spread that has seen the biggest change – in 2016, China surpassed the United States for the first time as the biggest destination country for Korean students.

Many of those students are taking advantage of the fact that China is a relatively close and relatively cheap option for short-term study programs – 65 percent of Korean students in China were taking language or other educational courses. In comparison, the vast majority of Korean students in the United States (85 percent) were enrolled in a full undergraduate or graduate program.

International students are a huge boon to the United States both intellectually and economically – according to the U.S. Department of Commerce, tuition, fees, and living expenses from Korean students added $2.3 billion to the economy in 2014. The United States would do well to invest in advertising and scholarship programs to keep Korean students interested in choosing American schools for their study abroad experience.

 Jenna Gibson is the Director of Communications at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from Tulane Public Relations’ photostream on flickr Creative Commons. Graphic by Juni Kim, KEI.

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Should the U.S. Delay Announcing the Results of its North Korea Policy Review?

By Troy Stangarone

While the Trump administration has upended established expectations in regards to U.S. relations with Europe, China, Mexico, and for international economic policy, North Korea is perhaps the one area where the administration has taken a largely conventional approach. Reflective of the seriousness with which the administration takes the North Korea challenge, it is also one area where the administration is undertaking an extensive policy review before putting forward a policy. With the review set to be concluded by the end of this month, how should the administration proceed?

For much of the last decade, U.S. policy has been to preclude there being any daylight between Seoul and Washington when it comes to North Korea. With President Trump’s general inclination to reshape relationships and the impeachment of Park Geun-hye precipitating a snap election for a new president on May 9, the prospect exists for the United States and South Korea to find their preferred policy options out of alignment.

While the policy review is incomplete, U.S. Secretary of State Rex Tillerson on his recent trip to Seoul may have hinted at some of the conclusions that the review has reached. In his remarks, he stated that the policy of strategic patience has ended and didn’t preclude the possibility of the U.S. taking pre-emptive action against North Korea. He also indicated that the United States was not interested in negotiating a freeze of North Korea’s nuclear program, but rather would only enter into talks to end North Korea’s nuclear weapons and missile programs. These are not significant breaks from current U.S. policy, and likely indicate that the review will lead to reenergized efforts to put international pressure on North Korean rather than an abrupt change of direction.

In ordinary circumstances, there would be no need for the new administration to delay the rollout of its North Korea policy, but with South Koreans heading to the polls on May 9 and the new government set to come into office immediately thereafter, it might be prudent to withhold any policy pronouncements until after the new South Korean government is in place.

There would be three clear advantages for the United States in refraining from immediately announcing the results of its policy review. First, it would preclude the United States, rather than North Korea policy itself, from becoming a key focal point in the elections. Second, it would avoid the perception that the United States was trying to foreclose options for the new government before it has come to power. Lastly, should there be difference in policy approach being considered in Seoul, it would allow the Trump administration and the new administration an opportunity to work out their differences in private before either party announced a new policy.

One of the most certain ways that North Korea would succeed in its attempts develop nuclear weapons and an intercontinental ballistic missile capable of reaching the United States would be through divisions in the U.S.-Korea alliance. If delaying the results of the U.S. policy review for two months helps to ensure that there continues to be no daylight between U.S. and South Korean policy on North Korea, that would be a small price to pay to maintain the unity of the U.S.-ROK alliance.

Troy Stangarone is the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute of America. The views expressed here are his own.

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A Conversation on THAAD from the Chinese Perspective

KEI Communications Director Jenna Gibson, host of the KEI podcast Korean Kontext, recently interviewed Yun Sun, Senior Associate with the East Asia Program at the Stimson Center,  about the Chinese perspective on the THAAD missile defense system.

 The following is a partial transcript of that conversation. The rest of the episode can be found here.

 Jenna Gibson: Can you start by giving us kind of the big picture here from Chinese perspective? Why are they so opposed to that and how serious are they about trying to stop this deployment?

Yun Sun: Well, the Chinese explanation is that they believe this is a military threat to China’s nuclear capability. It’s because the radar could reach as far as 2,000 kilometers, so the Chinese view that their military deployment and their military exercises, basically any military operations inside mainland China, will not be able to escape the radar that the THAAD system will encompass, so they feel vulnerable. So, there is a security argument there.

There’s also a political argument where the Chinese argue that they see this as an effort by the United States to reinforce and re-strengthen their alliance relations with South Korea. And even with the possibility of the integrated missile defense system in Northeast Asia, the United States is intending to create a Northeast Asia NATO against China. That is a political dimension.

There is also an interesting leadership dimension. If you look at President Xi Jinping’s policy towards the Korean Peninsula since his inauguration in 2013, it is a very interesting shift as Xi Jinping had been trying to pull South Korea closer to China. So, there had been a deterioration of relations between China and North Korea, but at the same time, what forms a sharp contrast to that is a warming or rapprochement between Beijing and Seoul. So it’s almost like Xi Jinping’s personal foreign policy achievement that under him, South Korea has become much closer and much friendlier towards China. So, this THAAD deployment must have been very disappointing for the top Chinese leader, that this is his creation, his baby, and his campaign, and now it’s not coming to a good result.

Judging from the economic sanctions that Beijing has been willing to impose on South Korean, not only government, but primarily South Korean companies. I’d say that the Chinese are very serious about punishing South Korean entities for the deployment of THAAD. That represents Beijing’s determination and their seriousness to stop the deployment. But, I also think they understand that at this point, budget has already been allocated, the land has been secured, and the deployment has started. So, they have to understand that this is going to happen with or without their support or sanction.

 Jenna Gibson: So, things have seemed to come to a bit of ahead in a week or so with China allegedly cracking down on streaming of Korean TV shows, going after Lotte department stores, and possibly banning travel agencies from selling trips to Korea. Why has China seemingly stepped up their economic pushback against the missile defense system?

 Yun Sun: The timing is because the deployment is finally going to happen materially. In the past, although the decision to deploy the THAAD system was made almost last summer, it was a political decision. So the Chinese have been persistently using different policy instruments, trying to change the calculus, change the decision by the South Korean government. So, I would say that until the deployment is completed and until the South Korean government tells Beijing unequivocally that the decision is permanent and is final, the Chinese will not stop pushing. So before the deployment is completed, Beijing will keep pushing.

 Jenna Gibson: So, I have a personal theory. I think that China is killing two birds with one stone here. They are seizing upon an opportunity to cut down on the popularity of Korean pop culture in China, which Beijing has been upset about it for years. What do you think about that? Is this more than just the missile defense system?

 Yun Sun: If you look at how the Korean pop culture had been received and perceived in China by the Chinese government, you will find this interesting distinction that basically under President Lee Myung-bak, Korean pop culture was regarded as almost toxic in China. But, we will have to assume that this was very closely linked to the judgment that President Lee Myung-bak was pro-U.S. and anti-China.

Then, under President Park, the Chinese government policy towards Korean pop culture was actually quite positive. You’ll see Korean pop stars appearing on the Chinese New Year’s Festival gala on the Chinese Central Television, which is quite a high prominent treatment for foreign movie actors or pop stars.

So, I would say that the Chinese attitude towards Korean pop culture is still very much related to the political climate between the two countries. When the political relations are good, the Chinese are more likely to treat Korean pop culture with positive reception. But, when the political relations are bad, you will see that there is almost a ban for any Korean soap operas on Chinese TV today.

  Jenna Gibson: I will be really curious to see the things go forward, you know, how much are the Korean companies, how much is k-pop, how much are Korean dramas affected going forward? Is there any pushback? I’ll be really curious to follow that.

 Yun Sun: Yeah, so far, we haven’t seen that much of a pushback from the Chinese general public. You see this anti-Korea demonstrations in some of Chinese cities as well. You also see that one point, Korean cars were pretty popular in China, and now there are people who are vandalizing Korean cars on the street. So, what that says is the government’s ability to influence the public opinion on these matters is really strong.

There’s also the fact that local governments would assume that the central government want to see this anti-Korea sentiment bubbling from their locale. So sometimes, the central government may not be behind certain movement against a certain Lotte supermarket. But, a local government might be.

  Jenna Gibson: Now that the U.S. is clearly in the middle of this, too. We are the ones who are deploying THAAD and of course we are close allies with South Korea. So, what advice would you give to the United States in this situation? Is there a way to work with China on the North Korean issue right now? I know President Trump has been really emphasizing that China peace in solving the North Korean problem. Do you think that that’s the right way to go?

Yun Sun: I think the U.S. is doing the right thing. The deployment of THAAD is not about China, it is about North Korea. And if China doesn’t like it, it must address the source of the problem, which is the North Korean nuclear provocation. So, I think the U.S. is absolutely doing the right thing here.

And for the Trump administration, the U.S. does have this first mover advantage. After the Taiwan controversy, the Tsai Ing-wen phone call, and after President Trump’s comments in the past about how he is going to punish China on trade and is going to negotiate with China for a good deal, I think the Chinese are put on alert. They are very sensitive about what the U.S. might do to China next. And they are not in a very confident position to challenge President Trump. So that almost gives President Trump and his administration an edge, an advantage over China’s policy because China does not want to start a fight with the Trump administration either over North Korea or over the South China Sea.

So, I feel that there is room for the U.S. to push China. For example, there have been talks about more sanctions on North Korea, so China already preempted that. We are already suspending our co-import from North Korea for the rest of this year. What else do you want? You have to be very specific. If you ask us to cut our aid, especially the energy transfer and our food supply to North Korea, the United States will have to answer difficult questions like — what if this creates a humanitarian disaster in North Korea. So, I think the United States has to be very specific about it wants China to do and stand ready to answer the counter-questions that the Chinese will raise.

KEI Intern Jennifer Cho assisted with transcribing this interview.

Image from USFK’s photostream on flickr Creative Commons.

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What Donald Trump’s Foreign Policy Means for South Korea

By Alex Ward

Contrary to popular belief, President Donald Trump has a coherent worldview: the United States does not get as much from the world as it should, and the main goal of American foreign policy should be to change existing structures and arrangements to ensure the most benefit for the American people. And while it may appear Trump’s foreign policy is now turning more conventional, it is important to remember that Trump does not have coherent policy understanding to make the world he envisions come true.

This is a major problem for Northeast Asia—a region, like many others, that pines for stability—and especially for South Korea. Besides Trump’s more provocative, but unlikely, statement during the campaign, namely, that South Korea along with Japan should acquire nuclear weapons to protect themselves, his foreign policy has three big implications for South Korean policy planning.

First, South Korea cannot assume that Trump prioritizes its security or economic well-being. US Secretary of Defense James Mattis did very well on his recent “apology tour” to South Korea and Japan. In a readout of his meetings with ROK Minister of Foreign Affairs Yun Byung-Se and Minister of National Defense Han Min-Koo, it said that Mattis’ trip demonstrates the “priority the Trump Administration places on the Asia-Pacific region, and on strengthening the US-ROK alliance.”

Those are nice words, but if the first few weeks of the administration, not to mention the entire campaign, have shown anything, no long-standing alliance or partnership is safe. Trump has questioned German Chancellor Angela Merkel’s leadership, imperiled relations with Mexico, and even found a way to push Australia away. If South Korean leaders assume Trump may not someday purposefully or inadvertently weaken the US-ROK relationship, they should think again.

Trump is a one-man “red team.” He has come into the Oval Office with a zero-based approach to U.S. foreign policy. Any deal, any partnership, any alliance is up for renegotiation if Trump does not feel it is helping Americans more than helping the ally. Therefore, the day may come where Trump decides prioritizing South Korea’s security or economic well-being is no longer in America’s interest. The alliance’s perseverance is now not a guarantee.

Second, South Korea could establish itself as an important ally of this administration if it takes a hard stance against North Korea. North Korea’s missile test of a Pukguksong-2 received condemnation from China, Russia, Japan, South Korea, and the United States. It reminded the global community that North Korea remains a threat to regional and global stability. For the Trump administration, it rightfully worries that North Korea may someday launch a missile at the American homeland, something Trump promised “won’t happen!

If there is a way for South Korea to ingratiate itself with the new White House, it must demonstrate itself a willing partner to deter North Korean aggression. The Trump administration has made clear its top three national security priorities will be China, Iran, and counterterrorism, primarily defeating ISIS. If South Korea can help in any way contain North Korea—and frankly keep it off of the President’s desk—then Seoul will be seen more favorably in Washington. The results of the South Korean presidential election will likely affect how the Trump administration views South Korea down the line.

Lastly, it’s about us, not you, anymore. In Trump’s inaugural address, he made the following statement:

We assembled here today are issuing a new decree to be heard in every city, in every foreign capital, and in every hall of power. From this day forward, a new vision will govern our land. From this moment on, it’s going to be America First. Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families (emphasis mine).

In other words, do not expect the animating purpose of America’s relationship with South Korea to be about giving it the security and economic backing it needs to continue to grow. Now, as Janet Jackson would say, the question America will continue to ask is “what have you done for me lately?” Where once the United States simply wanted a strong partner in Northeast Asia, the Trump administration now wants a bilateral partner that helps bring jobs mostly to Middle America. This would mean manufacturing jobs that would otherwise go to young South Koreans, many of who pine for steady employment today.

Under Trump, the United States sees itself as “regular” country in the sense that it will unabashedly seek its own interests and not greatly contribute to global security and stability—just like most other countries. America will, at least for now, no longer be the leader of the free world and the liberal international order.

Dealing with America, then, will be a major challenge for South Korea. Seoul, and other world capitals, must answer the following question: how to keep the United States happy while also ensuring maximum benefit for their own citizens? Indeed, Trump now makes it so allies must first ask how they can help America instead of the other way around.

It is a new global paradigm. South Korea, like everyone else, must deal with this new reality.

Alex Ward is the Associate Director of the Brent Scowcroft Center on International Security at the Atlantic Council. The views expressed here are the author’s alone.

Photo from Gage Skidmore’s photostream on flickr Creative Commons.

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U.S. Bilateral Relationships in Asia: Public Perceptions and Uncertainty

By Juni Kim

Despite being only February, 2017 has already had an eventful new year. Japan recalled its ambassador from South Korea over the ongoing “comfort women” controversy, the South Korean field of presidential candidates is starting to take shape, and the new Trump administration has signaled potential shifts in the status quo of U.S. bilateral relationships. All of these developments amount to a great deal of uncertainty over key relationships in Northeast Asia, and the coming months should prove to be interesting, to put it mildly.

The Chicago Council on Global Affairs, in association with other policy institutes worldwide, recently released a new study examining public opinions in America and Northeast Asia. Although the surveys in the study were conducted before the U.S. presidential election and the South Korean presidential impeachment, they provide a snapshot into global public opinions that will likely be affected by the significant events of the past few months.

With the Trump administration signaling the stabilization of U.S.-Russian relations and the fallout from President Trump’s contentious phone call with Australian Prime Minister Malcolm Turnbull, it will be worth watching how American public opinion regarding both bilateral relationships may change in future polls. The Russian relationship had previously been seen by Americans as souring, with a majority of survey respondents believing that U.S.-Russian relations were worsening in 2016, while only a scant 5% of Americans thought so of U.S.-Australian relations. Unlike these two divergent examples, the new administration has made efforts to reassure South Korea of the strength of the U.S.-South Korean relationship, with President Trump even calling the relationship “ironclad” on a phone call with acting South Korean President Hwang Kyo-ahn.

Chicago Council Numbers 2 (002)

The importance of U.S.-South Korean relations is underscored by similar threat perceptions of North Korea. The overwhelming majority of both the U.S. and South Korean public believe the North Korean threat is either critical or important. The U.S. presidential transition and the impeachment of South Korean President Park Geun-hye have not prevented the administrations of both nations from understanding this threat. It was no mistake South Korea and Japan were the first overseas destinations selected for newly confirmed Defense Secretary Jim Mattis, which indicated that both Asian allies remain vitally important to U.S. security interests. Both the U.S. and South Korea would be wise to continue to signal to North Korea the continuing strength of the relationship and deter any potential provocations.

Chicago Council Numbers 3

Still, North Korea may decide to throw a wrench into an already uncertain global situation for its own political purposes. The recent events of Iran’s missile test and the ensuing announcement by the Trump administration to put Iran “on notice” are undoubtedly being closely watched by the North Korean regime. Their calculus on when to conduct provocations will likely be affected by the severity of the U.S.’s response. Even with the uncertainty present in both the U.S. and South Korea, North Korea remains a highly volatile wild card that could test the new presidencies at any time. Regardless of how North Korea acts, both the general public of America and South Korea are likely to continue to place high priority on North Korea’s weapons programs.

Juni Kim is the Program Manager and Executive Assistant at the Korea Economic Institute of America (KEI). The views expressed here are the author’s alone.

Photo from Dickson Phua’s photostream on flickr Creative Commons.

 

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About The Peninsula

The Peninsula blog is a project of the Korea Economic Institute. It is designed to provide a wide ranging forum for discussion of the foreign policy, economic, and social issues that impact the Korean peninsula. The views expressed on The Peninsula are those of the authors alone, and should not be taken to represent the views of either the editors or the Korea Economic Institute. For questions, comments, or to submit a post to The Peninsula, please contact us at ts@keia.org.