Moon’s new stance on North Korea

This is the eighth in a series of suggestions about new President Moon Jae-in. — ED.

After the ruling on the impeachment of former President Park Geun-hye in March, Moon Jae-in won South Korea’s presidential election by a landslide on May 9. The new President said his victory was the result of the Korean people’s desire for a government change and he would accomplish the two main tasks, reform and national unity.

Moon is facing an array of domestic challenges, including rising youth unemployment and torpid economic growth. He has also promised to reform the chaebol.

Besides domestic issues, Moon’s policy toward North Korea is getting worldwide attention. Moon’s position on North Korea is expected to depart greatly from that of Park. He has argued that the hardline stance and economic sanctions have failed to halt North Korea’s nuclear weapons program. Moon has pledged to play a more active role in the multilateral negotiations with North Korea and to bring a more conciliatory approach while maintaining pressure and sanctions to encourage the North to change.

During his campaign, Moon often argued that South Korea must embrace the North Korean people. Also, he advocated reopening the Gaeseong Industrial Complex in North Korea which was shut down by Park who claimed that it has been used to channel dollars to Pyongyang.

Moon’s new approach seems to be a revival of the so-called Sunshine Policy of the liberal governments from 1998 to 2008, which stands in stark contrast to U.S. President Donald Trump’s stance toward the North.

It is important to open dialogue with North Korea to ease severe tensions on the Korean Peninsula. However, diplomatic politics of the new government on this matter should be undertaken very prudently, making sure they are not damaging either the international cooperation or the imposition of economic sanctions against North Korea. For example, even proposals of reopening the Gaeseong park now will disrupt joint efforts to stop the North, causing a serious breach in Korea’s relationship with the U.S. Additionally, strengthening the South Korea-U.S. alliance would help relieve potential conflicts in trade issues. In 2016, China’s trade surplus in goods with the U.S. was $347 billion, which corresponds to 46.3 percent of the total deficit.

However, I do not believe that the Trump administration will stay hawkish on China because the U.S. needs China’s cooperation to counter North Korea.

Further, starting a trade war against China will cost Trump a lot politically, because China’s retaliation can eliminate many jobs in the U.S. Furthermore, rising import prices will add a greater burden on low income consumers who spend more money on necessities.

They won’t fight Japan either due to similar reasons. On the other hand, Korea could become a scapegoat. Korea was the eighth-largest trade surplus country last year and has met two of the three criteria to be officially named a currency manipulator by the U.S. Treasury Department.

Engaging in trade conflicts with South Korea will not create much damage to the U.S. economy, but it may provide substantial political gains to Trump for his next election in four years.

Amidst a political vacuum since the impeachment of Park, Trump has ignored the South Korean government in recent discussions about the North Korea problems with Chinese President Xi Jinping and Japanese Prime Minister Shinzo Abe, even though Pyongyang poses a direct threat to the South. It is not pleasant to admit this but it would be crucial for the new government to maintain harmonized strategies to join the discussion and to play an active role in seeking peaceful solutions to these problems.

Dr. Hyeongwoo Kim is an economics professor at Auburn University. He received his Ph.D. from the Ohio State University and his B.A. and M.A. from Seoul National University. He has published over 25 SSCI journal articles since 2009 in the areas of macroeconomics, financial economics and economic forecasti ng. He can be reached at gmmkim@gmail.com.