Academic journal article Asian Perspective

The Abe Effect on South Korea's Trade Policy

Academic journal article Asian Perspective

The Abe Effect on South Korea's Trade Policy

Article excerpt

WHEN ABE SHINZO RETURNED TO POWER IN DECEMBER 2012, FEW people expected that Japan-South Korea relations would hit their lowest mark since diplomatic relations between them were restored in 1965. Instead of celebrating joint accomplishments of the past five decades, the two sides attempted to improve their severely strained relations, which included failure to hold a oneon- one summit meeting since Abe took office. History conflicts emanating from Abe's historical revisionism in regard to imperialism and colonialism have been the primary source of political strains. While South Korea's president Park Geun-hye has demanded a more explicit apology from Japan on the history issues, such as the Imperial Army's enslavement of so-called comfort women, in Japan a view is gaining strength that it has apologized enough. Increasing enmity is reflected in public opinion surveys, such as one by the East Asia Institute and Genron NPO in spring 2014. It found that nearly 70 percent of South Koreans have a negative image of Japan, while 66 percent of Japanese have an unfavorable image of Korea (East Asia Institute 2014). This trend will most likely continue throughout 2015 because, as John Delury's article in this volume argues, the odds of genuine reconciliation between Abe and Park are very low.

Abe's return to power has also made an economic impact. The best example is his decision to enter TPP (Trans-Pacific Partnership) negotiations on March 15, 2013, significantly affecting South Korea's trade strategy that sought middle-power leadership as a hub of regional and transregional free trade agreement (FTA) networks. Abe's decision means that Japan supports the TPP, the US initiative in regional trade architecture, and helps to enhance the TPP's credibility and viability as a mega-regional trade agreement within the US coalition-building strategy (Terada 2013). Abe's move prompted China's response to accelerate the pace of devising alternative FTA networks. And it created strategic dilemmas for South Korea. Because the United States, together with Japan, has taken the initiative in forging regional trade networks through the TPP while China is counterbalancing it, the FTA game is now about creating (or multilateralizing) a regional or megaregional FTA. This is a blow to South Korea's "global FTA hub" strategy predicated on bilateral FTAs with the major economies.

My article explores how South Korea has responded to the challenges caused by the major economic powers. After providing an overview of South Korea's evolving strategies toward FTAs as an FTA latecomer, I examine the country's policy toward the TPP. I then analyze the "Abe effect" on South Korea's global hub strategy. The new dilemmas facing South Korea on TPP participation are twofold. It felt strong US geopolitical pressure once Japan entered the negotiations. But should South Korea enter the FTA negotiations, it would have to deal with a difficult Japan.

The Rise of South Korea in the FTA Game

FTAs and the Hub Strategy in East Asia

East Asian countries embarked on FTA initiatives in response to economic globalization, the Asian financial crisis, and competitive regionalism. The push for FTAs in East Asia is also part of the global proliferation of bilateral FTAs in the aftermath of the problems experienced in concluding the Doha Development Round of the World Trade Organization (WTO). As latecomers to FTAs, East Asian countries used bilateral FTAs as an expedient way to catch up with other regions. One characteristic feature of East Asian FTAs is the politically strategic nature of designing them. Because FTAs increase a country's political influence and international status, the choice of trading partners is important. Countries frequently choose partners that pose few political risks-i.e., protest from sensitive trade sectors. In East Asia, proliferation of FTAs has been driven by what Ravenhill (2010, 178) terms a "political domino effect," with governments' primary concern being their potential exclusion from a new dimension of regional economic diplomacy. …

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