The Need for Deepening US-Korea-EU Economic Cooperation – The Diplomat

Earlier this year, President Yoon Suk-yeol became the first South Korean president to attend a NATO summit. His visit signaled the prospect of deepening security cooperation between South Korea and Europe, spurred by the recent acceptance of South Korea’s mission to NATO. While South Korea’s security cooperation with Europe brings two of the US’s most important security partners closer together, all three would benefit from expanded trilateral economic cooperation.

The desire to deepen cooperation between NATO and South Korea is driven by, as NATO said, the need to cooperate with non-regional partners to address “cross-regional challenges and common security interests.” But the same challenges—whether Russia’s invasion of Ukraine or China’s growing assertiveness—that create the need for cross-regional security cooperation also create the need for cross-regional energy and technology cooperation. Meanwhile, broader economic trends such as digitization and scientific innovation in biotechnology and nanotechnology, as well as climate change, require a similar level of interregional cooperation.

These issues are not clearly linked to the region, but require cooperation with non-regional partners. Washington, Seoul and Brussels would be wise to create mechanisms that bring together the best partners to cooperate on identified issues, rather than sticking to the traditional focus of regional cooperation.

Trilateral cooperation between the United States, the European Union and South Korea would strengthen the already strong economic ties between the three economies and allow for better coordination on emerging economic issues. All three economies are among the top 10 trading partners; all are technology leaders and are pursuing ambitious climate goals. South Korea was also the first major economy to enter into free trade agreements with both the United States and the European Union.

Trilateral cooperation would also help to solve the challenge of integrating South Korea into regular discussions with Europe on economic and technological issues, given Tokyo’s reluctance to include Seoul in the G-7.

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While there is potential for closer cooperation, any efforts to develop trilateral cooperation should be limited in the early stages to avoid overcomplicating the relationship and focus on the complex challenges and opportunities related to technology, energy and climate change.

Technical cooperation

The era of globalization, when technology spread freely to other countries, is over. While the pandemic shortage has shown the United States and the EU need to strengthen domestic semiconductor manufacturing capacity, competition with China is driving a fundamental shift in technologies such as semiconductors.

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Since the Trump administration, the US has sought to limit the flow of advanced technology to China. The Biden administration has continued this effort by tightening export restrictions on semiconductor and related equipment sales to China, and is also considering restrictions on biotech exports and an artificial intelligence algorithm. The EU also takes the view that it must maintain its technological advantage over China.

With more than 75 percent of the world’s semiconductors produced in Asia, the United States has sought to deepen ties with partners in the region through the Chips 4 initiative, with a specific focus on South Korea. However, any semiconductor initiative that does not include the EU, an important partner in semiconductor equipment, is suboptimal at best. A tripartite collaboration between the US, South Korea and the EU would bring together three major players in the industry and fill the Chips 4 gap.

While semiconductors should be the focal point of any initial trilateral cooperation, as three of the world’s leading technology economies, more intensive consultations could help smooth out differences in approaches to technology and digital trade. The United States and the EU often take different positions on data privacy, with South Korea at the forefront of creating the metaverse and promoting new standards for in-app payments. The US, EU and South Korea won’t always agree on these issues – Washington and Seoul, for example, have different approaches to in-app payments – but all have an interest in working together to ensure standards that support open and transparent technologies.

The United States and the European Union could facilitate trilateral cooperation by expanding the US-EU Trade and Technology Council (TTC) to include South Korea. The TTC was originally created to show that a democratic and market-oriented approach to trade, technology and innovation still worked in a world of growing state-led capitalism. The involvement of South Korea could strengthen this process.

Cooperation in the field of energy and climate change

Russia’s invasion of Ukraine and the weaponization of energy exports have increased the need for energy security cooperation. Before the Russian invasion, the European Union was dependent on Russia for about a third of its oil imports and more than half of its LNG imports. South Korea is less dependent on Russia, which accounted for only 9 percent of fossil fuel imports, but is much more dependent on the Middle East, another region prone to conflict.

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During the immediate crisis, the United States increased its energy exports and helped the EU secure other energy sources, including South Korea, which agreed to allow some LNG to be diverted to Europe.

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Climate change is where these immediate concerns and their national security implications begin to converge with the potential for technology and energy cooperation. The United States, South Korea and the European Union have their own ambitious climate change initiatives. The United States aims to 2030 reduce emissions by 50-52 percent compared to 2005. level, South Korea – 40% compared to 2018 and EU – 55% compared to 1990. Achieving these goals will require a shift to electric vehicles, greener carbon-intensive processes such as steelmaking, and the development of new energy sources, as well as consideration of trade-based carbon caps. These are all possible areas of cooperation.

One example of this convergence is the shift to electric vehicles (EVs). South Korea will play an important role in the transition, especially in EV batteries. South Korean companies announced about 13 billion South Korean companies are also expanding their production in the EU to meet European demand.

However, the US Inflation Reduction Act (IRA) requires an increasing number of minerals used in electric vehicle batteries to come from the United States or US FTA partners in order to qualify for half of the EV subsidy provided under the IRA. While it has strained relations with South Korea and the European Union, it is designed to encourage the movement of supply chains for high-tech products and minerals critical to national security to the United States or friendly partners and away from China, which has come to dominate the mining and processing of these minerals.

Greater trilateral cooperation would not only facilitate the resolution of IRA disputes with the US’s two main partners, but also allow for better coordination in setting new standards to reduce steel emissions, where the US and the EU are already cooperating and South Korea’s biggest steelmaker has committed. until 2050 achieve carbon neutrality. Cooperation could also include discussions on the development of carbon regulation measures and the commercialization of new fuels such as hydrogen, which can replace gas in some areas and is being pursued by all three economies.

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Cooperation in each of these areas would help the US, EU, and South Korea develop more secure energy supply chains, as well as advance energy and energy-related technologies.

Despite the potential, there will be obstacles to closer trilateral cooperation. As the world’s two largest economies, the United States and the European Union may be reluctant to bring in new partners like South Korea, but rather work together to develop standards for new technologies or rules to regulate carbon borders. This would be inefficient at best and self-defeating at worst, as both the EU and South Korea’s disappointment with the Anti-Inflation Act shows.

For example, despite concerns about China’s lead in 5G patents, South Korean companies are ranked second in terms of patents. With the addition of the US and the EU, these three economies have a significant advantage. The quality of the patents will be important, but whether it’s 5G, semiconductors or other technologies, South Korea is a key partner in the technology standards debate.

South Korea will face obstacles in its trilateral cooperation. While the Yoon administration has promoted the idea of ​​South Korea becoming a major world power, there has previously been a reluctance to take any action for fear of China’s response. South Korea, for example, has taken some preliminary steps with Chips 4 despite criticism from China, but more meaningful alignment with the US and European Union may be difficult.

Despite these challenges, trilateral economic cooperation would be beneficial. But the test of any new collaboration forum is whether it provides new skills and capabilities or fills gaps in the existing architecture. At a time when the importance of the G20 is likely to diminish due to the rivalry between China and the US, not to mention the question of Russia’s role, there is no solid platform connecting the US, the European Union and South Korea, three of the world’s largest economies and most important technology partners. There will be issues such as climate change that will require cooperation with other partners, but strengthening trilateral cooperation on technology, energy and climate change would help fill an important cooperation gap, improve coordination on emerging issues, and provide economic benefits. .

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