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In South Korea, Biden seeks to rebuild economic ties across Asia

  • >>Zolan Kanno-Youngs and Peter Baker, The New York Times
    Published: 2022-05-21 13:30:47 BdST

President Joe Biden boards Air Force One to begin a trip to Seoul, South Korea, at Joint Base Andrews, Md, May 19, 2022. Doug Mills/The New York Times

When President Joe Biden arrived on his inaugural mission to Asia on Friday, the first place he headed from the airplane was not a government hall or embassy or even a military base, but a sprawling superconductor factory that represented the real battleground of a 21st-century struggle for influence in the region.

The choice of destination to begin a five-day trip to South Korea and Japan underscored the challenges of Biden’s effort to rebuild US ties to a region where longtime allies have grown uncertain about Washington’s commitments amid anti-trade sentiment at home, while China has expanded its dominance in the economic arena.

The president hopes to lure countries back into the US orbit despite the decision by his predecessor, President Donald Trump, five years ago to abandon a far-reaching trade pact known as the Trans-Pacific Partnership — but not by rejoining the economic bloc, even though it was negotiated by the Obama administration that he served as vice president. Instead, under pressure from his liberal base at home, Biden plans to offer a far less sweeping multinational economic structure that has some in the region sceptical about what it will add up to.

Biden will formally unveil the Indo-Pacific Economic Framework on Monday in Tokyo, bringing together many of the same countries from the trade partnership to coordinate policies on energy, supply chains and other issues, but without the market access or tariff reductions that powered the original partnership. Eager for US leadership to counter China, a number of countries in the region plan to sign up and hail the new alignment but privately have expressed concern that it may be an empty exercise.

The framework is essentially “a new packaging of existing Biden administration priorities in this economic policy area,” said Scott A Snyder, director of US-Korea policy at the Council on Foreign Relations. “And whether or not it really takes off depends on whether partners believe that there’s enough there there to justify being engaged.”

Snyder added that he thought South Korea, for one, was taking seriously the Biden administration’s commitment to invest in the region. “I think they’re believing,” he said. “And we’ll see whether they’re whistling past the graveyard.”

But even Biden’s own ambassador to Japan, Rahm Emanuel, acknowledged the uncertainty in the region over the new economic framework. Countries want to know, “What is it we are signing up for?” he told reporters in Tokyo on Thursday. Is this an alternative to the Trans-Pacific Partnership? “Yes and no,” he said.

The framework is not a traditional free trade agreement but instead an architecture for negotiation to address four major areas: supply chains, the digital economy, clean energy transformation and investments in infrastructure. Jake Sullivan, the president’s national security adviser, said it would be “a big deal” and a “significant milestone” for relations with the region.

“When you hear some of the, ‘Well, we don’t quite know. We’re not sure because it doesn’t look like things have looked before,’ I say, ‘Just you wait,’ ” he told reporters on Air Force One as it made its way across the Pacific. “Because I think this is going to be the new model of economic arrangement that will set the terms and rules of the road for trade and technology and supply chains for the 21st century.”

Sullivan said there will be “a significant roster of countries” joining the framework when Biden kicks it off Monday, but administration officials have not identified which countries. Japan, which has signalled it would rather the United States rejoin the Trans-Pacific Partnership, will nonetheless embrace the new framework as the best it can get at the moment, as will South Korea. Singapore, Thailand and the Philippines have indicated interest in joining, while India and Indonesia have expressed some reservations.

Prime Minister Pham Minh Chinh of Vietnam said this month that it was still not clear what the new framework would mean in concrete terms. “We are ready to work alongside the US to discuss, to further clarify what these pillars entail,” he said at a forum held by the Center for Strategic and International Studies.

The Financial Times reported that the administration had diluted the language of the organising statement to entice more countries to join. Some countries are concerned that the United States will force labour and environmental standards on them without the trade-offs of better trading terms, which are off the table because of liberal opposition within Biden’s party.

“There’s a reason that the original TPP was derailed,” Sen. Elizabeth Warren, D-Mass., said at a hearing last month. “It would have offshored more jobs to countries that use child labour and prison labour and pay workers almost nothing. Let me be clear: The IPEF cannot be TPP 2.0.”

Emanuel said the administration would describe the new framework process as a “consultation to negotiation,” as he put it. “We have to have an approach that respects countries where they are,” he said. “Meaning where Japan is or where Australia is is not necessarily where Vietnam or Thailand or the Philippines are.”

Moreover, he said, the administration wanted a framework that could survive beyond Biden’s presidency, unlike the Trans-Pacific Partnership. “We have an interest in saying we are still a player in the Pacific, and China has an interest in saying the US is on its way out,” Emanuel said.

Biden’s visit to the Samsung semiconductor facility immediately after disembarking from Air Force One served as a reminder of how critical the region is to his immediate priority of unsnarling the supply-chain problems that have hurt American consumers back home.

Shortly after landing at Osan Air Base, Biden joined President Yoon Suk-yeol of South Korea at the plant, praising it as a model for the type of manufacturing that the United States desperately needs to head off soaring inflation and to compete with China’s growing economic dominance.

“This is an auspicious start to my visit, because it’s emblematic of the future cooperation and innovation that our nations can and must build together,” Biden said, noting that Samsung will invest $17 billion to build a similar plant in Taylor, Texas.

“Our two nations work together to make the best, most advanced technology in the world,” Biden added, surrounded by monitors showing Samsung employees listening to his remarks. “And this factory is proof of that, and that gives both the Republic of Korea and the United States a competitive edge in the global economy if we can keep our supply chains resilient, reliable and secure.”

While demand for products containing semiconductors increased 17% from 2019 to 2021, there has not been a comparable increase in supply, partly because of pandemic-related disruptions. As a result, automobile prices have skyrocketed, and the need for more chips is likely to increase as 5G technology and electric vehicles become more widespread.

The United States already faces an “alarming” shortage of the semiconductors, Gina Raimondo, Biden’s commerce secretary, warned this year, adding that the crisis had contributed to the highest level of inflation in roughly 40 years.

The soaring consumer prices have helped to drive down approval ratings for Biden, who has seized on global supply-chain problems to urge Congress to pass proposed legislation that would provide $52 billion in grants and subsidies for semiconductor-makers and $45 billion in grants and loans to support supply-chain resilience and American manufacturing.

The Samsung stop was just one effort to encourage Asian allies to invest in the United States. On Sunday, Biden will join the chairman of Hyundai to celebrate the South Korean company’s decision to invest in a new electric vehicle and battery manufacturing facility in Savannah, Georgia.

With questions hanging over his economic strategy in Asia and a manufacturing bill stuck in Congress, Biden is seeking a helpful partner in South Korea, said Daniel Russel, a vice president at the Asia Society who was assistant secretary of state for Asia in the Obama administration.

“I think that the relationship, which is already quite strong, can flourish,” Russel said. “There’s a strong convergence of views between the Biden team and the Yoon team on security policy, including concerns about China, the need for global cooperation and working together on semiconductors and trade.”

Yoon, a conservative politician and a former prosecutor, is one of the leaders in the region who has welcomed the Biden administration’s traditional approach to foreign policy after the chaotic Trump years. Soon after Yoon was elected in March, he sent a delegation of senior advisers to Washington to build ties with the Biden administration.

Sue Mi Terry, director of the Asia program at the Wilson Center in Washington, said she expected Biden and Yoon to have natural chemistry. “While President Yoon has a stern image as a former prosecutor, he is actually folksy, middle class and down to earth — just like the ‘ordinary Joe’ in the White House,” she said.

The Yoon administration has coordinated with American officials on sanctions against Russia and agreed to abide by export controls on critical technologies. Although South Korea remains a major buyer of Russian oil, it has signaled that it is trying to reduce those purchases. According to people familiar with his thinking, Yoon is also seeking to identify which supply chains can be moved out of China for greater economic security.

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