Dispute drives silent wedge between U.S., S. Korea
At first glance to many people, things are looking good on the Korean Peninsula: President Donald Trump and North Korean leader Kim Jong Un are planning their second faceto-face meeting, which is slated to happen in Vietnam later this month.
South Korean President Moon Jae-in has called it an opportunity that “will never come again.” After all, it’s not just a matter of world peace — Mr. Moon is hoping the summit will unlock opportunities to collaborate with North Korea’s economy. That could mean reopening joint factories or building train lines that will carry the Russian gasoline South.
“We cannot afford to let this opportunity slip,” Mr. Moon said in a translated tweet Jan. 21. “We have to build unwavering peace and strive to ensure that peace brings opportunities for our economy.”
But as Mr. Trump and Mr. Moon work the negotiating table, some see sort of a diplomatic elephant in the room: Mr. Trump’s trade dispute with China is doling blows to ally South Korea’s already-struggling economy.
“The U.S. is such an important player in peace and good relations in East Asia,” said C. Harrison Kim, an assistant professor at the University of Hawaii at Manoa and author of “Heroes and Toilers: Work as Life in Postwar North Korea.”
Even amid talks between Washington and Beijing, the possibility of a grave U.S.China trade war looms. Last September, the Trump administration slapped new tariffs on $200 billion of Chinese imported goods, partially in response to China’s theft of American intellectual property in the form of technology. This is expected to drive up the price of basic items like electronics, beer and clothing in the United States — but in South Korea, the squeeze is even tighter.
That’s because South Korea heavily relies on exporting semiconductor chips to China, which are then incorporated into the assembly of cell phones (semiconductor chips make up 26 percent of South Korea’s exports). Therefore, levied taxes on Chinese goods imported into the U.S. means even less demand for chips exported from Seoul to China. In December 2018 alone, South Korean chip output fell about 5 percent while overall exports to China dropped roughly 14 percent. And in the event of a “fullblown trade war,” South Koreans expect a projected loss of $36.7 billion.
It’s not the only reason South Korea’s economy is sputtering. But still, “there’s no denying that [the trade dispute] has an impact,” said Lisa Collins, fellow and Korea chair at the Center for Strategic and International Studies. “The U.S. and Chinese markets are the largest in the world, and China is South Korea’s primary trading partner.”
“President Trump does not care about the byproduct of the G2 trade war affecting U.S. allies,” said Jang JiHyang, a North Korea expert and the Seoul-based director of the Middle East and North Africa Center at the Asan Institute for Policy Studies. “And yes, the current Moon government is so focused on the peace of the [Korean] peninsula that smooth relations between the U.S. and North Korea are quite important.”
South Koreans have long feared that Mr. Trump’s bluster with China would lead to losses (and for months, it has). But Mr. Moon — who is becoming increasingly unpopular over the nation’s economic woes — may have no choice but to save face.
“South Korea is dependent on the United States for security benefits and security relations, so when relations between the U.S. and China are bad or deteriorating, South Korea has to walk a very tight line,” Ms. Collins said. “They’re so focused on making progress in inter-Korean relations and they need U.S. support on that, so they don’t really want to rock the boat.”
“President Trump has been pretty clear about his desire to lead with Americafirst policies and to protect U.S. interests above everything else,” Ms. Collins added. “It’s definitely different than previous administrations, but South Koreans are willing to deal with that.”
But as things continue to get sticky between the U.S. and China, South Korea is expected to please both Mr. Trump and his Chinese counterpart, Xi Jinping. One of the most prominent examples of South Korea’s need to artfully balance both sides came last year, when the Moon administration upset Beijing by installing the U.S.-designed THAAD missile defense system. China feared the Terminal HighAltitude Area Defense system could track its military activities, and the fallout was significant. South Korea suffered a massive drop in Chinese tourists and boycotts shuttered Korean stores in Chinese cities.
“China retaliated against South Korea in a lot of ways that hit the economy hard, and South Korea had to learn from that,” Ms. Collins said. “They are very cognizant now of the balance they have to strike between China and the United States.”
Trade tensions could drive a further wedge between the U.S. and North Korea in the days running up to the next big summit.
“Any kind of tension that the White House creates with Asia kind of prolongs this diplomatic difficulty that the U.S. has with North Korea,” Mr. Kim said. “Just like South Korea, [North Korea] needs to maintain and balance its relationship with China. So, when the USChina relationship is going sour, I think it becomes hard for North Korea.”
But for now, South Koreans at least still hope that Mr. Moon can ease tensions between the U.S. and China.