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 shows the prospect of strengthening security cooperation between South Korea and Europe, something that has been continued by the recent acceptance of the South Korean Mission to NATO. As South Korea’s security cooperation with Europe brings together two of the United States’ most important security partners, all three will benefit from expanded trilateral economic cooperation.

The desire for deepening cooperation between NATO and South Korea is driven – as NATO has put it – by the need to cooperate with partners outside the region to answer “cross-regional challenges and shared security interests”. However, the same challenges – whether Russia’s invasion of Ukraine or China’s growing assertiveness – that have created the need for cross-regional security cooperation have also created the need for cross-regional cooperation on issues related to energy and technology. Meanwhile, broader economic trends such as digitization and scientific innovation in biotechnology and nanotechnology, as well as climate change, require a similar level of cross-regional cooperation.

These issues are not regionally bound, but require cooperation with extraregional partners. Washington, Seoul, and Brussels would be wise to develop a mechanism that brings together the best partners for cooperation on a set of issues instead of sticking to the traditional regional focus for cooperation.

Trilateral cooperation between the United States, the European Union, and South Korea will tap into the already deep economic ties between the three economies and provide an opportunity to improve coordination on emerging economic issues. All three economies are among the top 10 mutual trade partners; all are technology leaders and pursue ambitious climate goals. South Korea is also the first major economy to have free trade agreements with both the United States and the European Union.

Trilateral cooperation would also address the challenge of integrating South Korea into regular discussions on economic and technological issues with Europe, if Tokyo is not willing to see Seoul added to the G-7.

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While there is potential for deeper cooperation, all efforts to build trilateral cooperation should be limited in the initial stages and avoid overburdening the relationship and focus on cross-cutting challenges and opportunities related to technology, energy, and climate change.

Cooperation Tech

An era of globalization that saw technology largely flow to other countries without hindrance. While pandemic shortages highlight the need for the United States and the EU to increase domestic semiconductor manufacturing capabilities, competition with China has led to many shifts in how critical technologies such as semiconductors are viewed.

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Starting with the Trump administration, the United States has sought to limit the flow of advanced technology to China. The Biden administration is continuing this effort by charging export restrictions on the sale of semiconductors and related equipment to China, and is considering export restrictions on biotechnology and algorithms that support artificial intelligence. The EU is also taking the view that it should maintain its technological superiority over China.

With more than 75 percent of the world’s semiconductors produced in Asia, the United States has looked to strengthen ties with partners in the region through the Chips 4 initiative and visited South Korea in particular. However, any semiconductor initiative that does not include the EU, which is a critical partner for semiconductor equipment, is suboptimal at best. The trilateral cooperation between the United States, South Korea, and the EU will bring together three critical players in the industry and fill the gaps in Chips 4.

Although semiconductors should be the focal point of any initial trilateral cooperation, as three of the world’s leading technology economies, enhanced consultation could help smooth the differences in approaches to technology and digital trade. The United States and the EU often take different positions on data privacy, while South Korea is at the forefront of developing the metaverse and pushing new standards for in-app payments. The US, the EU, and South Korea will not always agree on this issue – Washington and Seoul have different opinions on in-app payments, for example – but they all have an interest in working together and ensuring standards that support open and transparent technology.

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 designed to demonstrate that a democratic and market-oriented approach to trade, technology, and innovation still works in the world of state-led capitalism. The inclusion of South Korea could improve that process.

Energy and Climate Change Cooperation

Russia’s invasion of Ukraine and energy export arms have increased the need for cooperation in energy security. Prior to the Russian invasion, the European Union relied on Russia for about a third of its crude oil imports and more than half of its LNG imports. South Korea is less dependent on Russia, which accounts for only 9 percent of its fossil fuel imports, but is more dependent on the Middle East – another region potentially subject to conflict.

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In the immediacy of the crisis, the United States has increased energy exports and helped the EU to secure other sources of energy – including from South Korea which agreed to allow some of its LNG to be transferred to Europe.

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Climate change is one of these immediate issues and its national security implications are beginning to converge with the potential for cooperation in technology and energy. The United States, South Korea, and the European Union each have their own ambitious climate change initiatives. The United States aims to reduce emissions by 50-52 percent from 2005 levels by 2030, South Korea to reduce 40 percent from 2018 levels, and the EU 55 percent from 1990 emission levels. Achieving this target will require a transition to electric vehicles, greening high carbon intensity processes such as production steel, and develop new energy sources, while also considering the adjustment of carbon limits for trade. These are all potential areas for cooperation.

One example of this convergence is the transition to electric vehicles (EVs). South Korea is set to play an important role in the transition, especially in the area of ​​EV batteries. The South Korean company has announced an additional $13 billion in EV battery production facilities in the United States that will meet the needs of domestic and foreign manufacturers. South Korean companies are also expanding their production in the EU to meet European demand.

The US Inflation Reduction Act (IRA), however, requires an increasing level of minerals used in the production of EV batteries to be from the United States or US FTA partners to be eligible for half of the EV subsidies provided in the IRA. Although this creates tension in relations with South Korea and the European Union, it is designed to push the movement of supply chains of minerals considered critical for high-tech products and national security to the United States or friendly partners and away from China. has come to dominate the mining and refining of these minerals.

Increasing trilateral cooperation will not only facilitate resolving the dispute about the IRA and the two key partners of the US, it will allow for better coordination in setting new standards to reduce emissions from steel, where the US and the EU have been cooperating and the main steel producer South Korea has committed. to achieve carbon neutrality by 2050. Working together can also extend to discussions on designing carbon limit adjustment measures and commercializing new fuels such as hydrogen, which has the potential to replace gas in several applications and is being pursued by all three economies.

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Working together in each of these areas will help the US, EU, and South Korea develop a more secure energy supply chain while also developing advanced technologies in the energy and energy fields.

Despite the potential, there will be obstacles to deeper trilateral cooperation. The United States and the European Union, as the two largest economies in the world, may be reluctant to bring in new partners like South Korea and instead work together to create standards for new technologies or rules for adjusting carbon limits. It would be at best inefficient and at worst self-defeating as the frustration of the EU and South Korea over the Inflation Reduction Act shows.

Despite concerns about China’s lead in 5G patents, for example, South Korean companies are second in total patents. With the US and the EU added to, the three economies have a significant role. The quality of patents will be important, but whether it is 5G, semiconductors, or other technologies South Korea is a key partner for discussions in the field of technology standards.

South Korea will face its own obstacles to trilateral cooperation. While the Yoon administration has promoted the idea of ​​South Korea becoming a pivotal global state, there has previously been a reluctance to take steps amid concerns about China’s response. South Korea has taken some tentative steps with Chips 4, for example, despite Chinese criticism, but more significant alignment with the United States and the European Union may be difficult.

Despite these challenges, there will be benefits from trilateral economic cooperation. The test, however, for any new forum of cooperation is whether it brings new skills and capabilities to the table or fills gaps in the existing architecture. At a time when the G-20 is likely to diminish in importance due to China-US rivalry, to say nothing of Russia’s role, there is no strong platform connecting the United States, the European Union, and South Korea – three of the world’s largest economies and critical technology partners. There will be issues, such as climate change, that will require more cooperation with other partners, but increasing trilateral cooperation in technology, energy, and climate change will help fill important cooperative gaps to improve coordination on emerging issues, and provide economic benefits . .

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