The Peninsula

How South Korea Can Upgrade its Strategic Partnership with Vietnam

Despite differences in political ideology, South Korea’s relationship with Vietnam has deepened and evolved since formal diplomatic relations were established in 1992. Trade and economic investment have grown substantially, and the two countries have upgraded their bilateral relationship from a “dialogue partnership” to a “strategic partnership.” Next year’s 30^th anniversary of South Korea’s diplomatic relations with Vietnam provides an opportunity for both nations to not only reflect on their past cooperation, but to also consider expanding their strategic cooperation. With robust economic relations, shared geopolitical concerns, and increased mutual trust, the two countries can reinforce each other’s middle power aspirations and work together to ensure regional stability amid U.S.-China tensions.

Economic interdependence serves as foundation for the ROK-Vietnam strategic partnership. South Korea’s trade with Vietnam has grown most rapidly as Hanoi advanced from Seoul’s 59^th largest export partner in 1989 to its third largest in 2019. The trade relationship has continued expanding over 15 percent annually since the implementation in 2015 of a free trade agreement (FTA), with the total two-way trade amounting to 69.2 billion USD in 2019. Hanoi and Seoul remain committed to increasing this number to 100 billion USD by 2023, as proposed during a 2018 summit. During the pandemic, cooperation continued with Vietnam waiving quarantine protocols for South Korean business travelers in early 2021, until recently when it halted all international flights into Hanoi due to an upsurge in COVID-19 cases. Similarly, South Korea became Vietnam’s number one FDI investor in 2019 and provides the largest share of its official development assistance (ODA) to Hanoi.

Vietnam is a particularly attractive partner for South Korea because of its political and economic stability among ASEAN member states. Politically, Hanoi continues to remain open towards foreign investment with the support of its legal system. Vietnam’s New Law on Investment from January 2021, for example, is regarded as even more welcoming of foreign investment than past provisions. Furthermore, Vietnam has demonstrated a steadfastness in its goal to modernize and industrialize. With an annual economic growth rate of 7 percent, Hanoi has advanced from a developing nation to a rising middle power. Vietnam’s economic vibrance, openness to foreign investment, and cost effective labor force offer Seoul an ideal overseas production base for smartphones, textiles and electronic products, and a trustworthy partner in Southeast Asia.

Vietnam is also a centerpiece of South Korea’s New Southern Policy (NSP), which was reaffirmed during the bilateral ministerial meeting on April 28. In addition to serving as NSP’s economic pillar, Vietnam bodes strong support for the policy’s three P’s: “People, Peace and Prosperity.” Beyond economics, the Vietnamese public are believed to generally hold a positive perception of South Korea, owing to the vast array of cultural interactions and bilateral tourism prior to the pandemic, thereby strengthening people-to-people relations.[1] Vietnam is also an important partner for South Korea’s NSP Plus, which emphasizes cooperation in areas of public health and human development in addition to the economy in aiding post-pandemic recovery.

While economics have been a firm basis for Seoul and Hanoi’s relationship, both nations can further deepen their partnership on a geostrategic level, building on decades of mutual trust. Geographically, Vietnam is crucial for effective communication as it lies at the center of Southeast Asia. Hanoi is also the current ASEAN Chair and a non-permanent member of the UN Security Council for 2020-2021. More importantly, the ROK and Vietnam face similar geopolitical challenges, especially amid heightened tensions between the United States and China. Although their post-Cold War political systems deviate from one another, Seoul and Hanoi have witnessed an increasing convergence in their geopolitical trajectories, perpetually navigating between the two great powers by depending on Beijing for economic needs while looking to Washington for defense and strategic backing. As a result, both South Korea and Vietnam remain hesitant to participate in multilateral platforms involving the United States that may potentially incite Chinese retaliation.

One such platform is the Quadrilateral Strategic Dialogue (Quad) consisting of the United States, India, Australia and Japan. Despite Washington’s efforts to clarify Quad is not a security alliance targeted at Beijing, Seoul and Hanoi—both are considered potential Quad-plus candidates —have been cautious to join the forum, even with their previous participation in an expanded Quad meeting at the vice-ministerial level on COVID-19. The memory of Beijing’s economic retaliation during the THAAD dispute is still vivid in Seoul. Chinese experts have also publicly alluded to the network as an “anti-China coalition,” raising the stakes for South Korea and Vietnam in joining the alliance. As such, South Korea maintains that it has not yet received a formal invitation to join the Quad, while signaling willingness to engage with Quad members on an issue-by-issue basis. Vietnam also remains hesitant to join while staying alert for opportunities to engage with the U.S. and other members of Quad. Nonetheless, the U.S.-ROK joint statement at the May 2021 bilateral summit outlined cooperation on objectives shared with the Quad.

With similar geopolitical challenges, strong economic interests, and willingness to support the regional order, South Korea and Vietnam should look to each other to increase cooperation with other like-minded nations while managing the danger of Beijing’s coercion. For one, the two countries already display high economic interdependence, with Vietnam even being considered as a potential manufacturing alternative to China for South Korea and other countries. Increased bilateral cooperation also comes at an opportune time as the U.S. and South Korea pledged on May 13 to enhance cooperation in Southeast Asia in support of promoting a free and open Indo-Pacific. Therefore, even outside the Quad, Seoul, Hanoi, and Washington could discuss similar issues and objectives in separate forums. For example, in line with the Quad’s objectives, the three countries can help to build capacity for addressing climate change through cooperation on renewable energy, especially with South Korea’s launching of its own Green New Deal. U.S.-ROK-Vietnam dialogues would also help Hanoi bolster its own bilateral relationship with Washington, elevating it from a comprehensive to a strategic partnership.

South Korea and Vietnam are both regional middle powers caught by strategic dilemmas amid intensifying U.S.-China competition. With reluctance to partake in memberships that may complicate their respective position between the two powers, the two countries should look to at least take an intermediary step by first strengthening their bilateral relations in support of the regional order.

Sea Young (Sarah) Kim is a visiting scholar at the East-West Center in Washington for the East-West Center-Korea Foundation U.S.-ROK Cooperation in Southeast Asia program. The views expressed here are her own.

Image from Andrea Schaffer’s photostream on flickr Creative Commons.

[1] The number of South Korean travelers to Vietnam rose from 1.5 million in 2016 to 3.4 million by 2018, making South Koreans the second largest group of foreigners to visit Vietnam after Chinese tourists. With around 170,000, Vietnam houses the largest South Korean expatriate community in ASEAN. The number of Vietnamese residents in Korea also totaled 224,518 in 2019, making up the second largest group of foreign nationals in South Korea after the Chinese.