The Peninsula

South Korea Focuses its Sights on South America

What Happened

• On March 17, the Korea-LAC Digital Cooperation Forum commenced, which fosters cooperation between Latin American and Caribbean countries (LAC) and South Korea.
• Leading up to the event, President Moon stated that Korea and LAC are ideal partners in spaces such as digital and eco-friendly technology.
• These events come the same month Korea is to fully implement its fair-trade agreement (FTA) with a group of Central American countries.

Implications: As an export-driven economy, Korea works consistently to diversify its markets. Currently, its most extensive trade partners are China and the United States. However, the US-China trade war in 2017 raised concerns in Korea about its economic reliance on these two economies. The Trump administration’s constant scrutiny of the KORUS FTA sowed further uncertainty. The necessity for economic diversification was also underscored by supply chain insecurity exposed by COVID-19. Korea now focuses on expanding its diplomatic and economic connections with countries often overlooked in Korean foreign policy. With Korea’s New Southern Policy (NSP) established in 2020, the country is taking new strides to establish better relations with South and Southeast Asia. South Korea is also considering participation in the CPTPP. As Korea strives for economic diversification, greater resources may be dedicated to advance initiatives such as NSP.

Context: South Korea has pursued trade agreements in Latin America since the early 2000s. With limited natural resources, Korea initiated trade partnerships in the region to secure raw materials and export markets for its manufactured goods. In 2004, Korea signed its first South American FTA with Chile. The following year, South Korea and the Mercosur trading bloc started discussing a potential FTA, with negotiations last held in 2020. The expansion of Korean business activities are evident in Samsung’s presence as the leading smartphone distributor in the region.

This briefing comes from Korea View, a weekly newsletter published by the Korea Economic Institute. Korea View aims to cover developments that reveal trends on the Korean Peninsula but receive little attention in the United States. If you would like to sign up, please find the online form here.

Korea View was edited by Yong Kwon with the help of Melissa Cho and Alexandra Langford. Creative Commons image from Flickr account of  Edificio Mercosur