In recent decades, a strange reverse symmetry has emerged between the leaders of South Korea and the United States. This has continued to the current leadership of the two countries, but has not prevented the emergence of tensions that may hinder the economic interests of both sides.
The conservative leaders of South Korea tend to be globalized and take a firm rather than belligerent stance towards North Korea. They understand that the outbreak of conflict will have a devastating impact on all parties concerned, so they get along well with the Democrats of the United States. For example, the governments of Barack Obama and Lee Myung bak finalized the Korea Free Trade Agreement in 2010. Park Geun hye abided by the desire of the Obama team to reach an agreement with Japan on thorny historical issues in 2015.
However, when the Republican President came to the White House, the South Korean President tended to be progressive and more concerned about the affairs of their region, while paying much less attention to North Korea. George W. Bush and progressive Kim Dae jung and Roh Moo hyun disagreed on the Korean issue, and anti American sentiment surged. Donald Trump and the progressive Moon Jae in administration blamed each other for the breakdown of negotiations with North Korea in 2019. The negotiations on providing financial support for the alliance are also worrisome. South Korea has abandoned the cooperation with Japan promoted by the United States.
With the return of the Democrats to the White House in 2020 and the election of the right-wing Yin Xiyue in South Korea in 2022, such comity seems to have returned, and cooperation on economic and security matters will also deepen. Biden may be a different Democrat from Obama or Clinton, and pay more attention to rebuilding the domestic manufacturing industry than their government, but Yin is also a different conservative; Although previous leaders, even pro American governments, hovered between the United States and China, Yin seemed more willing to stand on the side of the United States and take risks in relations with Beijing.
Electric cars threaten to cancel all this.
The nature of the dispute revolves around the Korea Free Trade Agreement, which lowered barriers for Korean automakers to enter the U.S. market in 2010. With the recent adoption of US legislation (i.e. the “Inflation Reduction Act” passed this summer), the Biden government tried to position itself as a leader while formulating Asian trade rules, and at the same time transfer the production of high-end technologies to other places. However, it seemed to backfire, canceling the tax credit for Korean electric vehicle manufacturers, and joining with the conservative and progressive media in South Korea to oppose.
Hankyoreh, a left-wing newspaper, wrote: “The United States is changing from a defender of free trade to a destroyer of international trade norms.”.
“In essence, Biden’s’ better reconstruction ‘is no different from (Trump’s’ make America great again’),” said the conservative China Hong Kong Daily.
So far, the dispute has continued. The headline news of Yin’s recent visit to the United States certainly expressed South Korea’s dissatisfaction, but it hardly brought the two sides together on this issue.
For some people, it is ironic to see that South Korea opposes the industrial policy of the United States, because the industrial policy largely explains the importance of South Korea as an ally to the United States. South Korea was once an extremely poor country, with almost no exports except for light industries such as textiles. The development dictatorship before the transition in 1987 focused on channelling US aid to domestic investment in creating heavy industries and high-end goods. In 1961, South Korea seemed to be a money pit, and the US leadership sometimes considered giving it up because people believed that there was no hope to protect it from North Korea’s takeover.
By 2000, after the Asian financial crisis subsided, South Korea’s per capita gross national income was 20 times that of North Korea. South Korea had a successful shipbuilding, chemical and steel industry. Kia and Hyundai competed with Japanese and American made cars in the United States. Samsung Electronics continued to climb steadily in the high-tech value chain. Although Samsung is not a semiconductor giant like Taiwan TSMC, it is a huge and growing player in this market. Therefore, South Korea, together with Taiwan and Japan, was selected as a part of the Chip 4 alliance with the United States, and therefore sought its support for the India Pacific economic framework at an early stage. In view of its broad definition but few details, IPEF needs such support to achieve its goal: to prove that the United States will not lag behind China in formulating trade rules for the region, and will not sacrifice American employment opportunities due to foreign competition.
South Korea signed Chip 4 and IPEF, just as it signed KORUS FTA. Now its political and business leaders feel betrayed. Because Yin Xiyue, who was elected reluctantly in March, faces hostility (may be rejected)