Trump’s Welcome Change of Heart on South Korea Trade Deal

Presidents Moon Jae-in of South Korea and Donald Trump of the United States meet on the sidelines of the United Nations General Assembly in New York, October 2
Presidents Moon Jae-in of South Korea and Donald Trump of the United States meet on the sidelines of the United Nations General Assembly in New York, October 2 (White House/Shealah Craighead)

American president Donald Trump appears to have changed his mind about a trade deal with South Korea.

As recently as a month ago, there were reports Trump was on the verge of withdrawing from the agreement.

Now American and Korean trade negotiators have agreed to amend the treaty in order to make it “fair” and “reciprocal”.

I doubt changes will really make the pact fairer and not more favorable to the United States. But that would still be better than canceling it. Read more

Canceling South Korean Trade Deal Would Be a Mistake

South Korean president Moon Jae-in attends a military ceremony in Quantico, Virginia, June 28
South Korean president Moon Jae-in attends a military ceremony in Quantico, Virginia, June 28 (USMC/Rachel Ghadiali)

Various American media report this weekend that President Donald Trump is thinking of canceling a trade agreement with South Korea.

This may be bluster: an attempt to force the South Koreans to make concessions. It’s the way Trump “negotiates”.

But if he makes good on this threat, it would be another self-inflicted wound for American commerce and a setback for America’s strategy in East Asia. Read more

North Korea in the Next Five Years

The sun sets on Seoul, South Korea, November 19, 2011
The sun sets on Seoul, South Korea, November 19, 2011 (Kristoffer Trolle)

The Korean War, fought from 1950-53, was a result of two earlier wars in the 1940s: the American-Japanese War, which ended with the destruction and occupation of Japan in 1945, and the Chinese Civil War, which ended in a Communist victory (and Nationalist retreat to Taiwan) in 1950.

With the Communists and Americans as the only powers in East Asia following these wars, the Korean Peninsula was split in two, each side taking a piece for itself. Read more

Obama Slaps Ally in the Face with Steel Tariffs

Presidents Barack Obama of the United States and Park Geun-hye of South Korea walk in the garden of the Blue House in Seoul, April 25
Presidents Barack Obama of the United States and Park Geun-hye of South Korea walk in the garden of the Blue House in Seoul, April 25 (White House/Pete Souza)

Less than three years ago, the Obama Administration finalized a free-trade agreement with South Korea, one of America’s most important trading partners and allies in East Asia. The president was enthusiastic about the deal, saying it would “significantly boost exports that bear the proud label ‘Made in America,’ support tens of thousands of good paying American jobs and protect labor rights, the environment and intellectual property.”

Indeed, the International Trade Commission, an independent federal advisory body, said the deal could boost American exports by up to $12 billion per year and create as many as 280,000 jobs in the United States.

Yet the same Barack Obama is now rolling back trade with South Korea.

On Friday, his Commerce Department slapped a 10 to 16 percent tariff on South Korean steel. Smaller exporters elsewhere could face rates as high as 118 percent — a punishment for allegedly “dumping” steel into the American market at “unfair” prices, i.e., what happens if there is free trade.

The tariffs could become permanent if a special trade commission finds that the alleged dumping hurts American steelmakers — which, of course, it does. Which would, in turn, raise their profit margins while increasing costs for American consumers, including other businesses.

The Koreans expressed disappointment. “We had expected the American government to lead by example and resist protectionist pressure,” said a Korean embassy official in Washington DC.

They shouldn’t have been so surprised. Read more

South Korea Should Study Its Past to Deal with North’s Future

North Korean leader Kim Jong-il and South Korean president Kim Dae-jung shake hands at Pyongyang Sunan International Airport, June 15, 2000
North Korean leader Kim Jong-il and South Korean president Kim Dae-jung shake hands at Pyongyang Sunan International Airport, June 15, 2000 (AFP)

North Korea is known for its exaggerated and bellicose proclamations against South Korea. Recently, it declared that strikes “without warning” would occur if protests in Seoul marking the anniversary of the death of Kim Jong-il continued. But the recent execution of Kim Jong-un’s uncle, Jang Sung-taek, demonstrates a far deeper issue that North Korea wants contained: the internal desire for reform or revolution. If South Korea reflects on its previously successful and not so successful engagements with North Korea and learns from them, it is possible for a reunification or positive reform to eventually occur without war or destruction.

Despite losing many of its allies and supporters following the Cold War, North Korea has persisted in rebelling against international etiquette and refuses to collapse. South Korea is experienced in the rogue state’s belligerent attitude and has actively spent the last fifteen years dedicating policy experts and analysts to the task of avoiding war and establishing a peacefully feasible reunification. Some have been historically progressive whereas others have led to armed confrontation. These precedential dealings are the best platform to successfully move forward regarding a rogue state that cannot be understood through standard rational analysis.

Kim Dae-jung’s “Sunshine Policy” departed from previous policy regimes and in 1998 commenced a different style of engagement with the North. Implemented after a destructive North Korean famine, the South Korean president advocated a neoliberal approach and pushed for an economic relationship to achieve a deeper and more peaceful engagement between the two Korean states.

The collapse of the Soviet Union had caused North Korea to spend eight years without a financial benefactor. By insisting on zero tolerance toward provocation as well as the promise to actively seek cooperation and not forcibly absolve the North, the Sunshine Policy provided a strong, compromised and hospitable source of desperately needed economic support. However, the condition for North Korea to actively pursue denuclearization was no longer attached to these economic incentives and this was a monumental step forward for inter-Korean relations.

The Sunshine Policy led to the creation of the Kaesong Industrial Complex and the Mount Kumgang Tourist Region. While the latter was shortly closed down, the former is the site of $1.6 billion of inter-Korean trade — 98 percent of total Inter-Korean trade.

By providing significant hard currency to North Korea’s dilapidating economy, Kim Dae-jung was not only resurrecting diplomatic and political ties but also contributing to the financial and infrastructural development that would ease a very tedious reunification process. This seemed possible during his tenure and the tenure of his successor, Roh Moo-hyun, both being happy to slowly but surely implement the policy’s principles.

There were setbacks throughout the Sunshine Policy but none were more hindering than President George W. Bush’s categorization of North Korea within an “axis of evil” as well as the Yeonpyeong Islands dispute in 2002 when both states incurred casualties. North Korea swiftly reacted to these events by shutting down talks with the South.

South Korea recognized that the North maintains a traditional and archaic form of diplomacy where it detests insults and is receptive to gestures of respect and leveraged this to garner friendlier relations. Examples of this can be seen with the insistence of Kim Dae-jung to hold a 2000 summit between the leaders of both countries or when Roh Moo-hyun physically crossed the Military Demarcation Line by foot to symbolize a deepening friendship.

Unfortunately, Lee Myung-bak did not see eye to eye with his predecessors and took on a very different style of engagement with North Korea. The Sunshine Policy was scrapped for his “Vision 3000.” Lee was determined to raise North Korean income per capita from $500 to $3000. Vision 3000, however, came with the revived condition of denuclearization. South Korea learned the hard way through the new president’s more stick and less carrot approach that sudden changes and rhetorical rivalry are not ingredients in the recipe for peace.

The 2009 joint military exercises between South Korea and the United States were received unfavorably by North Korea. In an act of defiance, the latter shut down the Kaesong Industrial Complex for several months. Decisions like these demonstrated the irrational policymaking of North Korea where a sacrifice of desperately needed hard currency could be made to emphasize a political statement. It was not the first nor the last time an American presence instigated a standoff on the peninsula, with the 2013 Kaesong shutdown also accredited to the combination of an adamant new opposition leader and a resurfacing American assertiveness.

Lee Myung-bak’s tenure demonstrated Kim Jong-il’s and Kim Jong-un’s unwavering emphasis on the power of words and image. North Korea’s conciliatory capacity was best exemplified by the presence of a North Korean delegation at Kim Dae-jung’s funeral, an incredible gesture from a state so isolated and aggressive. This was during the same period that Lee Myung-bak’s character assassination was in full effect with North Korean state media describing him as a rat.

These tensions simmered until the Yeonpyeong dispute surfaced again but this time with the direct shelling of the island and the sinking of a South Korean navy ship. Lee’s administration responded by cutting off almost all of the humanitarian aid that had been slowly accumulating since the Sunshine Policy was initiated. Foresight did restrain him from shutting down the Kaesong Industrial Complex, likely aware of both the cooperative and economic influence it had over North Korea and the fact that the latter had previously used its shutdown as a statement of contempt. As much as the Sunshine Policy may have reduced or prevented denuclearization, the benefits of an economic relationship in more effectively engaging North Korea were obvious and relatively sustained by President Lee.

Incumbent president Park Geun-hye’s “trustpolitik” policy has once again detached conditional denuclearization from economic cooperation as well as acting upon the North’s rhetorical diplomacy, coining the policy “trust” in an attempt to share and appreciate Korean values. But recent events should not be acted upon without considering past successes and failures.

Patience was a timely but ultimately beneficial characteristic of the Sunshine Policy, allowing an application over two presidential terms in order to have full effect. The Kaesong Industrial Complex, as mentioned, constitutes almost all of inter-Korean trade but to assume that North Korea will sanctify this arrangement above international disrespect was proven wrong when it shut down the complex earlier this year. A similar example of impatience was demonstrated by the Vision 3000 approach in which the insistence on denuclearization prevented a more comprehensive economic relationship from emerging.

The United States’ presence has been a consistent trigger of North Korean anxiety and, although South Korea will not sacrifice the military relationship, it must continue to structure North Korean engagement with as much patience and as little American involvement as possible. Kim Dae-jung and Roh Moo-hyun demonstrated this and if Park Guen-hye continues to express a similar sentiment (which she has begun to do), a more peaceful and less reactive North Korea can be dealt with.

The personality and discursive style of Kim Dae-jung is unlikely to be replicated but Roh Moo-hyun saw the impact of respect and personal fondness on North Korea’s elite and successfully emulated this to continue cooperative relations. Despite its contrast, President Lee was justified in his direct responses to North Korean aggression but President Park can learn from her predecessor that the timing and delivery of her reactions will directly influence future North Korean sentiment.

North Korea has expressed both formal and informal hints toward economic change with some seeking a prolonged survival and others, such as Jang Sung-taek, seeking a revolution. If former basketball player Dennis Rodman can be invited back to Pyongyang based on his personal relationship with Kim Jong-un, there still remain opportunities to build conduits for North Korean engagement.

South Korea has a belligerent neighbor that is demonstrating signs of economic and moral dilapidation. By understanding the application of previous policies, there is an economic vulnerability that can be exploited with conditional provisions.

Firstly, be patient, as reform, revolution, or unification will not be quickly achieved.

Secondly, try to distance the United States from the North’s peripheral vision for as long or as best as possible.

Thirdly, do not attach a denuclearization requirement on economic cooperation.

Fourthly, avoid when necessary acts or words that could be interpreted as insults or disrespect.

And finally, peace is best accomplished through gestures of cooperation rather than confrontation.

Collectively, these will not only produce a less volatile reaction from North Korea and more peaceful engagement but they are the variables that determine whether the regime will pay its respects at your funeral or eternally compare you to a rat.

Pentagon Hopes Asian Allies Drive F-35’s Costs Down

An F-35 Joint Strike Fighter jet at Nellis Air Force Base, Nevada, April 4
An F-35 Joint Strike Fighter jet at Nellis Air Force Base, Nevada, April 4 (US Air Force/Brett Clashman)

The United States are counting on additional foreign sales of Lockheed Martin’s F-35 fighter jet to help drive down the plane’s costs.

Air Force Lieutenant General Christopher Bogdan, the Pentagon’s F-35 program chief, told the Senate on Wednesday that he is “cautiously optimistic” about South Korea joining the multinational development program in June when it is due to announce the winner in a procurement competition for the acquisition of sixty planes. Boeing’s F-15 and the Eurofighter Typhoon are among the other systems competing for the contract.

Bogdan also said that Singapore had shown “tremendous interest” in the F-35. The city state, which has a small but highly sophisticated air force, is reportedly in the “final stages” of deciding which plane should replace its three dozen Northrop F-5s which entered service there in the 1970s.

The United States’ Asian allies’ interest in Lockheed’s plane has increased since China unveiled two separate fifth-generation fighter jets of its own which are suspected to have a similar stealth capability.

The American airplane manufacturer and Defense Department claim that the F-35’s capabilities are still superior to those of China’s warplanes.

Even if Singapore and South Korea join the Joint Strike Fighter program, it might not make up for other participating nations reducing their F-35 buys.

Britain, which was supposed to cover some 10 percent of development costs, or $2.5 billion, plans to buy fewer planes as do Italy and the Netherlands which allocated $1 billion and $800 million to the project, respectively. Canada and Japan are increasingly wary as well.

Cost estimates have skyrocketed and varied since Lockheed was awarded the Joint Strike Fighter contract in 2001. The United States Air Force put the F35’s flyaway cost at anywhere between $89 and $200 million in 2010. In February 2011, the Defense Department said the 32 planes it expected to buy the next year would cost almost $210 million each, discounting research and development costs.

The Pentagon expects to finalize the acquisition of the sixth and seventh batch of F-35s by the end of next month, Bogdan told senators on Wednesday. The deal could involve 71 planes at a cost of some $9 billion.

The United States plan to eventually buy several thousands of F-35s which should bring down the costs per individual plane. But the new fighter will also likely be far more expensive in maintenance than the ones it is supposed to replace. The entire program has exceeded its original cost estimate by more than 50 percent. The Americans could pay over $1 trillion to operate the stealth warplanes over the next half century.

As a result of delays in the Lockheed program, the Air Force is refurbishing Boeing F-16 jets, some three hundred of which could remain in service through the 2020s when they would average forty years in service. It will also continue to fly some five hundred F-15s beyond 2030 when the youngest models will be almost fifty years old.

Of the Air Force’s 2,000 fighter jets, less than two hundred F-22 Raptors are currently on the cutting edge of aviation technology.

Would Korean Reunification Cripple the South?

Gyeongbokgung, Seoul in the snow, South Korea, December 5, 2012
Gyeongbokgung, Seoul in the snow, South Korea, December 5, 2012 ( Han)

North Korea, poor, malnourished, authoritarian, with supposed nuclear capabilities and a new crowned boy leader, is wildly different from its cousin beneath the 38h parallel. There they grow four inches taller, are workaholics, cyber obsessed users of democracy who lay claim to some of the most successful companies in the world such as Hyundai, LG and Samsung.

There are always rumors flying about over whether the two will take the same path as East and West Germany did even when they are busy trying to slay each other’s citizens, whether through sinking ships or the shelling of South Korean islands. Many believe that the economic cost of reunification to South Korea and the loss of Chinese influence in the North mean that it will not happen. But if it does, there’s some reason to be optimistic.

In 1960, South Korea was a starveling with a per capita annual income of $80. Since then, “The miracle on the Han River” has boasted the world’s most explosive economy: 8.7 percent annual growth through 1990 transformed it from an agricultural nothing into techno-metro sophisticate.

Just think what all those comparative undereducated North Koreans could do to the country. Goldman Sachs projects that, in an ideal scenario, the gross domestic product of a united Korea would overtake that of Japan and other highly industrialized economies in thirty to forty years — if North Korea’s full growth potential were tapped.

Peter M. Beck, a fellow at Stanford University, estimates that the cost of reunification would be $2 to $5 trillion. While that may cripple the South Korean economy, more than two hundred different minerals are trapped in North Korea, with, according to Bloomberg Businessweek, a combined net worth of some $7 trillion. This would pay fully for the reunification of the peninsula and leave some change floating about.

A reunified Korea would also have an extremely strong military. If one were to combine the active forces of North and South, you get the second largest army in the world, almost two million soldiers. Add into this a formidable swarm of airplanes, artillery, submarines and North Korea’s developing nuclear weapons program and you have a very tough “Asian tiger” indeed.

Why should the People’s Republic of China not want such a strong reunified Korea on its border? Well, much like the old Soviet Union, China has its own “near abroad”: those nations on its periphery where it wants to exercise preponderant influence, even hegemony and North Korea is certainly one of them.

Not having reunification could see the North slowly integrate economically into Manchuria and thus be viewed as a favorable investment for China. It could economically absorb the fellow communist state, not merely limit its autonomy. North Korea would remain a de facto Chinese vassal state. Such a scenario of economic assimilation means that henceforth Korean reunification could only take place, if ever, under Chinese auspices and only if a united Korea’s foreign policy conformed to China’s.

There is growing mistrust in China toward the North, however, largely due to its sometimes erratic behavior but also because it shares the South’s historical experience with Chinese domination. Despite the deep divisions and divides between the two Koreas, the same people live there with common memories of Chinese hegemony and bellicosity.

Reunification would not only avert the “Finlandization” of the North; it would constitute a strategic realignment in the region which would be a win-win scenario for both countries as well as Japan and the United States. For the proud North, moreover, it would send the message to China that it will no longer be relegated to beggar status and subject to its exploitation.

While reunification seems highly unlikely in the short term, few expected the “Arab Spring” uprisings just two years ago. If we’re in for a similar surprise in northeast Asia, she the prognostications shouldn’t be all doom and gloom.