Industry present “Active participation in IPEF but considering dependence on China”

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[이데일리 김형욱 기자] The Korea Institute for Industrial Economics and Trade, a state-run research institute, suggested that the Indo-Pacific Economic Framework (IPEF), launched recently led by the United States, be actively participated in from the beginning to broaden our position, but that our position, which is highly dependent on China, should be fully utilized within the IPEF. .

On the 17th, the Korea Institute for Industrial Economics and Trade announced an industrial policy report titled ‘The main contents of the IPEF and our role’ (Jeong-Hwan Choi, Associate Research Fellow, Office of Overseas Industry).

Deok-geun Ahn, head of the Ministry of Trade, Industry and Energy’s Trade Negotiation Headquarters (second from left), participated in a video conference at the Ministerial level of the 13 countries of the Indo-Pacific Economic Framework (IPEF) on the afternoon of May 23. (Photo = Ministry of Industry)

IPEF is a new economic cooperation system in the Asia-Pacific region led by the United States proposed by US President Joe Biden in October last year. It is a new concept that sets the framework for the new trade order, such as supply chain, digital, and clean energy, unlike existing economic cooperation organizations whose main goal is to reduce tariffs. The discussion began in earnest with the ministerial-level meeting of 13 countries on May 23. Since then, one Fiji (Pacific Island State) country has been added, confirming the participation of 14 countries. Participating countries are divided into four independent pillars: △Fair and resilient trade △Stable supply chain restructuring △Decarbonization and infrastructure establishment △Tax cooperation and anti-corruption. will be formed to promote the reorganization of the overall trade order in the region.

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The report suggested that, first, Korea should expand its position by actively participating in the ministerial meeting of member states, working-level meetings, and working groups to be held soon. Unlike existing FTAs, IPEF has no mandatory provisions and is an administrative agreement that has not been ratified by the US Congress, so there are doubts about its long-term sustainability and some negative perceptions, especially in emerging and developing countries. will be.

However, the report said that some of the agendas of the IPEF constituent pillars may have a negative impact on cooperation with China, so the pros and cons should be considered at a strategic level. For example, the infrastructure construction project through the IPEF has an aspect to contain China, and a strategic response plan is necessary as the interests of China’s One Belt, One Road initiative are at odds. In addition, although supply chain reorganization in the region is a new opportunity, in order to reduce dependence on China in the process of relocating production bases for industries such as semiconductors and batteries and selecting suppliers for intermediate goods, production cost increases and additional transaction costs may occur. I saw.

In particular, he suggested that Korea, which is highly dependent on China, needs to use this position appropriately, as even within the IPEF participating countries, there is a perception that complete de-China is realistically difficult and that participation in the IPEF should not be in a position to economically exclude China.

Lastly, the report added that ASEAN member countries are concerned that the IPEF will become a social gathering for the United States and some advanced countries, so efforts to allay such concerns should be made concurrently. As Korea is likely to play a leading role with Japan, Australia, New Zealand, and Singapore, it is said that in areas where we have strengths, such as establishing digital trade rules, establishing clean energy infrastructure, and decarbonization policies, we should seek ways to support ASEAN participating countries. will be.

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