By Hong Hyun-Ik
Former chancellor of Korea National Diplomatic Academy
Korea's APEC diplomacy advances nat'l goals, int'l cooperation
Hosting the Asia-Pacific Economic Cooperation (APEC) forum in Gyeongju, Gyeongsangbuk-do Province, a mega-scale multilateral gathering with over 20 heads of state, was the biggest task early in the term of the Lee administration.
First, the government just four months since its inauguration resolved problems with inadequate accommodations and meeting venues and hosted the event without incident thanks to the leadership of Prime Minister Kim Min-seok and the joint efforts of the Ministry of Foreign Affairs, Office of the President, and corporate sector including the Korea Chamber of Commerce and Industry.
The environment surrounding the event also faced extreme challenges. The U.S. and China, engaged in a cutthroat strategic competition, clashed head-on over policies toward protectionism and tariffs versus those toward free trade and multilateral cooperation.
As the chair country, Korea was still in the early stages of the Lee administration and had not yet fully set its ties with the U.S., China, and Japan—the three countries Seoul prioritizes most in its foreign and trade policies.
President Lee Jae Myung and his American counterpart Donald Trump had built trust after their Aug. 25 bilateral summit at the White House. Bilateral negotiations on tariffs and investment, however, were delayed three months after a tentative agreement was made in late July because of unreasonable demands from Washington on Seoul's plan to invest USD 350 billion in the U.S. as well as the investment targets and profit sharing. This mired the bilateral alliance in uncertainty.
President Lee visited Japan to strengthen trust with then Japanese Prime Minister Shigeru Ishiba and resume shuttle diplomacy. Setting up a trust-based bilateral relationship, however, took an unpredictable turn with the sudden inauguration of conservative-leaning Prime Minister Sanae Takaichi and the implications of her taking office for the progressive President Lee.
Relations with China, meanwhile, had been strained since Korea's 2016 deployment of the Terminal High Altitude Area Defense, an anti-ballistic missile defense system, and due to the ideology-centered diplomacy of the former Yoon Suk Yeol administration.
On this occasion, President Lee normalized ties with all three powers and built trust among their leaders. First in his talks with President Trump, President Lee secured an agreement on USD 350 billion of investment in the U.S. along with the USD 150 billion shipbuilding project Make American Shipbuilding Great Again, which also includes guarantees, being led by Korean companies. Direct investment of USD 200 billion was agreed in principle, with Seoul accepting Washington's demand in total amount but spread over 10 years to ensure financial market stability. A maximum of USD 20 billion will be invested every year based on commercial feasibility, and mechanisms for principal recovery were also established.
The profit distribution was agreed to be 50-50 to resolve uncertainty and restore stability to the bilateral alliance. President Lee also received the U.S. commitment for nuclear submarine construction and related fuel supply, further strengthening Korea's national security and the alliance. Seoul also pledged to raise its defense budget to 3.5% of gross domestic product within 10 years. Through these agreements, both sides agreed to pursue the transfer of wartime operational control from the U.S. to Korea and smoothly resolve strategic flexibility for the U.S. Forces Korea.
In his summit with Chinese President Xi Jinping, who visited Korea for the first time in 11 years, President Lee comprehensively normalized bilateral ties by focusing on cooperation in areas of mutual interest and major reciprocal benefits, especially the people's livelihood. To ensure stable financial markets given Korea's pledged investment in the U.S., Seoul and Beijing renewed a bilateral currency swap worth KRW 70 trillion that had expired in October. They also agreed to jointly respond to voice phishing, online scams and other transnational crimes that cause damage Korean nationals.
The two sides will pursue a second round of negotiations on a bilateral free trade agreement and expand exchanges and cooperation in content and culture, making progress on the ban on Korean cultural content in China.
They also agreed to hold working-level talks on China's illegal structures in the Yellow Sea, thus Seoul and Beijing made a fresh start in forming a smooth and mutually beneficial relationship in a future-looking manner.
In President Lee's summit with Japan, both sides built trust despite differences in their leaders' personalities and views by pledging future-oriented cooperation and continuation of shuttle diplomacy. President Lee called Prime Minister Takaichi "a wonderful politician" and pledged to visit her hometown in Japan's Nara Prefecture.
The APEC Economic Leaders' Meeting itself also produced meaningful outcomes. Due to conflicts over policy between the U.S. and China, the adoption of a leaders' statement seemed unlikely, but the conclusion of the Gyeongju Declaration was thanks to Korea's persistent mediation and diplomacy capacity. The delicate compromise included expressions related to the World Trade Organization and free trade, which had been included in the declarations of previous meetings, being inserted into the joint ministerial statement.
The Gyeongju Declaration used phrases like "robust trade and investment are vital to the growth and prosperity of the Asia-Pacific region" and "promote trade." A section added, "We will advance economic integration in the Asia-Pacific region in a manner that is market-driven, including through the work on the Free Trade Area of the Asia-Pacific (FTAAP) agenda" as proposed by President Xi, thus reflecting the purpose of the event.
"We acknowledge the positive contribution of the cultural and creative industries (CCIs) to economic growth," the declaration added, referring to a sector led by Korea. New agenda adopted including the APEC AI (Artificial Intelligence) Initiative and APEC Collaborative Framework for Demographic Changes will have Korea lead in the future.
Thus under the principle of practical diplomacy, the Korean government held successful bilateral summits with world leaders while showing consideration and sincerity toward such heads of state. Based on an accord with Asia-Pacific member states, Seoul fostered a sense of community and set guidelines for all countries to cooperate and achieve mutual growth and co-prosperity.
Future tasks
The Gyeongju APEC has ended. The Korean government must now take on again challenging policy issues. The top priority is properly sorting out and documenting the agreements with the U.S. on tariffs, investment and security and systematically set up the framework for implementation. Bilateral negotiations to revise a nuclear agreement and proceed with building nuclear-powered submarines also require further development.
Hanwha Philly Shipyard in Philadelphia as mentioned by President Trump has no equipment to build submarines, thus bilateral coordination on this issue is inevitable. The securing of enriched uranium for fuel must also be included in a formal agreement. Throughout the entire process, wisdom is needed to resolve opposition from neighboring countries such as China through persuasion and diplomacy.
President Lee will soon visit China at the invitation of President Xi to firm trust between both leaders and accelerate their future-centric strategic cooperative partnership. Diplomatic skills are key to persuade Beijing to play a more active and constructive role not only in peace and stability on the Korean Peninsula but also denuclearization and improvement of inter-Korean ties.
On Japan, communication among leaders needs upgrading and bilateral cooperation and trade need expansion in economy, science and technology, and socioculture. As a bridge country, Korea needs to help support a trilateral summit with China and Japan, something that Prime Minister Takaichi is hoping for.
The U.S. and China in their summit at the Gyeongju APEC eased bilateral tension but it could recur. So Seoul must help promote reconciliation between Washington and Beijing while simultaneously boosting its self-reliance and developing cutting-edge technologies, as well as actively seeking to stabilize supply chains and diversify export destinations.
Finally, the situation on the Korean Peninsula could enter a new phase if gradual but proactive efforts go toward easing tension and building trust between the two Koreas and supporting a meeting between President Trump and North Korean leader Kim Jong Un.
Hong Hyun-ik is a former chancellor of the Korea National Diplomatic Academy who since 1997 has researched national security and strategy at the Sejong Institute, focusing on North Korea's nuclear program; inter-Korean relations; Seoul-Moscow ties; and formation of a peace regime on the Korean Peninsula. He also recently served as the head of the foreign affairs and security subcommittee of the Presidential Commission on Policy Planning.
arete@korea.kr