Author

Chi Wook Kim is an assistant professor of International Relations at Ulsan University.

Abstract

During the 2010s, trade governance in East Asia will be regulated by networks of Free Trade Agreements (FTAs). In response to such a development, South Korea should maintain bilateral multilateralism approach, which promotes bilateral FTAs to form a multilateralism regime, while at the same time focusing domestically on improving national economic governance.

East Asia has experienced both economic ups and downs in the 1990s. However, with the 2008 global financial crisis, the region faces a new era again. The return of Asia in international politics is epitomized by the rise of China and relative decline of the United States. Such reorganization of political status and bilateral relations of the United States and China will determine the future trade order in East Asia.

Since the end of World War II, East Asia has succeeded in emerging as the “global factory” under the multilateral trade order, but failed to establish any internal multilateral trade treaties such as in Europe or North America. Instead, overlapping bilateral FTAs have emerged as typical arrangements that regulate Asia’s trade order and policies of each country. However, U.S.-China relations have emerged as a notable variable in the region’s trade politics, with a growing possibility of power transition between the two. China, to some extent, has succeeded in establishing regional clout via aggressively pursuing FTA strategies with Association of South-East Asian Nations (ASEAN) at the center. Meanwhile, the United States has remained aloof to FTA politics in Asia. It recently adopted, however, the Trans-Pacific Partnership during the Obama administration as a way to become more integrated to the region.

South Korea remains in a precarious position with FTA competition between China and the United States. The FTA networks in Asia are becoming increasingly denser as China expands its network based on ASEAN while and U.S. networks are rapidly growing through TPP. The fact that FTA polarization in Asia is based on bilateralism will be a challenge rather than an opportunity for South Korea. As such, Seoul’s trade diplomacy in the twenty-first century should focus on transforming bilateral FTAs into de facto multilateral regimes. South Korea should seek the policy of multilateral regime while establishing a system of coexistence in which the relationship between bilateralism and multilateralism remains complementary. Specifically, a bilateral FTA should embrace elements of “World Trade Organization (WTO) plus,” and be based upon Asia-Pacific Economic Cooperation (APEC) that encompasses East Asia and the Pacific. This is the strategy to shape regional multilateral treaties to be internalized within the WTO regime.

Domestic politics should refrain from defining FTAs as a panacea or poison; rather the focus should be on its application. For South Korea, which depends heavily upon foreign trade, free trade is not an option but a must. The issue remains on what means South Korea promotes free trade and for whom it actively pursues such an objective. Among others, economic governance should be improved in order to facilitate the gains of trade liberalization that spreads throughout society via FTAs. Conclusively, responding to the FTA phenomenon in Asia during the 2010s, South Korea should favor externally bilateral multilateralism and distribution-friendly economic governance at home.

The full text in Korean is available here