The Abe Effect on South Korea’s Trade Policy

Abstract

Prime Minister Shinzo's decision to enter talks on the Trans- Pacific Partnership (TPP) has been a game changer in the competition over Asia Pacific free trade agreements (FTAs). His move helped to create a space for multilateral, mega-FTA competition before South Korea could fully prepare and implement its FTA predicated on bilateral deals. In this article, I provide an overview of South Korea's evolving strategies toward FTAs and explore how it has responded to the Abe effect. My focus is on two challenges for South Korea in participating in the TPP: US geopolitical pressure once Japan entered negotiations, and the de facto FTA negotiations with Japan under the TPP. Dealing with Japan is an especially tall order given the troubled history of South Korea-Japan economic and political relations. KEYWORDS: Korea-Japan relations, TPP, Shinzo, strategy, security-economy nexus.WHEN ABE SHINZO RETURNED TO POWER IN DECEMBER 2012, FEW people expected that Japan-South Korea relations would hit their lowest mark since diplomatic relations between them were restored in 1965. Instead of celebrating joint accomplishments of the past five decades, the two sides attempted to improve their severely strained relations, which included failure to hold a oneon- one summit meeting since took office. History conflicts emanating from Abe's historical revisionism in regard to imperialism and colonialism have been the primary source of political strains. While South Korea's president Park Geun-hye has demanded a more explicit apology from Japan on the history issues, such as the Imperial Army's enslavement of so-called comfort women, in Japan a view is gaining strength that it has apologized enough. Increasing enmity is reflected in public opinion surveys, such as one by the East Asia Institute and Genron NPO in spring 2014. It found that nearly 70 percent of South Koreans have a negative image of Japan, while 66 percent of Japanese have an unfavorable image of Korea (East Asia Institute 2014). This trend will most likely continue throughout 2015 because, as John Delury's article in this volume argues, the odds of genuine reconciliation between and Park are very low.Abe's return to power has also made an economic impact. The best example is his decision to enter TPP (Trans-Pacific Partnership) negotiations on March 15, 2013, significantly affecting South Korea's trade strategy that sought middle-power leadership as a of regional and transregional free trade agreement (FTA) networks. Abe's decision means that Japan supports the TPP, the US initiative in regional trade architecture, and helps to enhance the TPP's credibility and viability as a mega-regional trade agreement within the US coalition-building strategy (Terada 2013). Abe's move prompted China's response to accelerate the pace of devising alternative FTA networks. And it created strategic dilemmas for South Korea. Because the United States, together with Japan, has taken the initiative in forging regional trade networks through the TPP while China is counterbalancing it, the FTA game is now about creating (or multilateralizing) a regional or megaregional FTA. This is a blow to South Korea's FTA hub strategy predicated on bilateral FTAs with the major economies.My article explores how South Korea has responded to the challenges caused by the major economic powers. After providing an overview of South Korea's evolving strategies toward FTAs as an FTA latecomer, I examine the country's policy toward the TPP. I then analyze the Abe effect on South Korea's global strategy. The new dilemmas facing South Korea on TPP participation are twofold. It felt strong US geopolitical pressure once Japan entered the negotiations. But should South Korea enter the FTA negotiations, it would have to deal with a difficult Japan.The Rise of South Korea in the FTA GameFTAs and the Hub Strategy in East AsiaEast Asian countries embarked on FTA initiatives in response to economic globalization, the Asian financial crisis, and competitive regionalism. …