This is the third in a series of blogs looking at South Korea’s foreign relations in the run up to the next Korean administration taking office on May 10. The series also includes blogs on relations with North Korea, the United States, China, Japan, Russia, the European Union, the Middle East, ASEAN, and Africa.
By Rose Kwak
In the 1990s, relations between the Republic of Korea (ROK or South Korea) and Latin America and the Caribbean (LAC) developed at a rapid rate, demonstrated by President Roh Tae-woo’s first official visit to Mexico in 1991, followed by President Kim Young-Sam visits to five countries in Latin America, namely Guatemala, Chile, Brazil, Argentina and Peru in 1996. Moreover, around this time, many Korean companies launched businesses in Latin America. Since then, the ROK– LAC economic relationship has evolved significantly, culminating in South Korea’s free trade agreements (FTAs) with Chile, Peru and Colombia. Moreover, starting in the 2000s, ROK-LAC relations moved beyond the economic front, demonstrated by increases in cultural exchange programs and people-to-people programs, highlighting greater efforts by the two sides to strengthen diplomatic relations.
Most recently, the Park Geun-hye administration continued to place a greater importance on the region, manifested by Park’s official visits to Colombia, Peru, Chile and Brazil, followed by her visit to Mexico the following year where she openly established bilateral economic relations. According to the Ministry of Foreign Affairs, Park Geun-hye’s visits to Colombia, Peru, Chile and Brazil in 2015 made the relations between the two regions “friendlier and stronger than ever.”
However, despite the significant growth in both economic and cultural relations between the two sides, the future South Korean administration has several important issues to consider. In the past, South Korea repeatedly expressed its interests in joining the Transpacific Partnership, a trade agreement between 12 countries that border the Pacific Ocean. However, in recent years, TPP has not only lost its momentum but also the new U.S. administration recently abandoned the TPP. It is therefore essential for the future South Korea’s administration to find a replacement model for TPP by continually engaging in FTAs with countries in Latin America to liberalize trade and develop a clear strategy to strengthen diplomatic ties with the region.
The ROK-LAC cooperation:
Trade between the ROK and LAC has been growing rapidly since the 1990s, increasing by 17 percent per year on average. Moreover, since 2004, foreign direct investment (FDI) from South Korea to the LAC increased by ten-fold. This impressive growth in trade and investments between the two sides exemplify the greater need for strong trans-Pacific ties in recent years. Developing a strong economic relationship provides benefits on both ends: South Korea can provide knowledge-intensive industries such as automobiles, electronics and high-tech manufactured goods while many of the LAC countries can provide minerals and other agricultural commodities. One of the major obstacles in liberalizing trade between the two sides, however, has been high tariff costs, although in the past two decades both sides have cut import tariffs significantly. Despite several obstacles, South Korea signed free trade agreements with Chile, Peru, and Colombia, which accelerated tariff liberalization. As a result, in 2013, 96 percent of export goods from Chile faced zero tariffs. Apart from economic cooperation, there has been an increase in cultural exchanges. For instance, in 2016, the second annual Latin American Film Festival took place in Seoul. Moreover, Latin American K-Pop fans participated in K-Pop song and dance competition in Buenos Aires.
Park Geun-hye administration and its progress with ROK-Mexico relations:
One of the critical achievements by the Park administration was its attempt to develop stronger economic relationship with Mexico. South Korea’s top two export destinations among LAC countries are Mexico and Brazil. Arguably, the primary reason that South Korea expressed its interest in the Transpacific Partnership (TPP) was “driven by Korean manufacturers’ desire to expand their presence in Mexico.” Mexico and South Korea signed 17 cooperation agreements during Park Geun-hye’s visit to Mexico which encompassed various issues such as technology and innovation, electricity and clean energy, transnational organized crime, tourism and intellectual property. Mexico also expressed support for Korea to join the TPP, and the two countries agreed to hold working meetings starting from the fourth quarter of 2016 in order to “promote trade, investment and cooperation” and to “confirm the friendship and cooperation between Korea and Mexico.” Between 2000 and 2015, total trade between the two countries increased from $4 billion to $17.5 billion. In the same time frame, Korea’s annual investment in Mexico increased by more than 24 times. President Park has reiterated the importance of the ROK-Mexico relationship, as Mexico is South Korea’s largest trading partner in Latin America and holds promising opportunities for the future growth.
Finding a replacement model for Transpacific Partnership?
With new U.S administration withdrawing from the TPP, developing strong economic and diplomatic relations (whether done bilaterally or multilaterally) with Latin America through FTAs and cultural programs is essential for the future of South Korean foreign policy. Latin America and the Caribbean region holds enormous potential for strategic, diplomatic and economic opportunities for South Korea. The Park administration made steps forward in furthering the ROK-LAC relations as exemplified by strengthening its relations with Mexico, Chile, Peru, Brazil and Colombia. From both strategic and economic stances, it is critical that the future South Korean administration continue to expand trade and investments in Latin America.
Rose Kwak is an intern at the Korea Economic Institute of America and a graduate of Davidson College in North Carolina. The views expressed here are the author’s alone.
Photo from Rafa Bahiense’s photostream on flickr Creative Commons.