South Korean President Yoon Suk Yeol stressed trust ahead of his high-stakes talks with President Joe Biden, whose administration is looking to align more with the long-time US ally on China and Russia.
(Bloomberg) — South Korean President Yoon Suk Yeol stressed trust ahead of his high-stakes talks with President Joe Biden, whose administration is looking to align more with the long-time US ally on China and Russia.
Yoon will be looking to protect the biggest players in his country’s export-driven economy from moves by the White House to subsidize US-made electric vehicles and curb the sale of advanced chip equipment to China, part of a wider strategy to deprive the world’s second-biggest economy of cutting-edge technologies that could threaten America’s status as a preeminent power.
That dynamic sets the stage for a transactional meeting between leaders of two nations that forged an alliance seven decades ago during the Korean War. Now they are facing new challenges beyond efforts to deter Kim Jong Un’s regime as it improves capabilities to deliver nuclear warheads to South Korea and the US mainland.
“At one point the relationship was primarily about the security on the peninsula,” Edgard Kagan, National Security Council senior director, said at a forum held last week in Washington. “Increasingly, it has become global.”
Yoon, who arrived on Monday, is due to visit the Korean War Memorial with Biden. The two leaders will then hold more intensive talks on Wednesday.
While Biden will be seeking help from South Korea to make supply chains less dependent on China, Yoon will be looking to seal deals for an array of companies such as chipmakers, car manufacturers and those involved in a homegrown space program. More than 120 executives are accompanying Yoon, including Samsung Electronics Co. Executive Chairman Jay Y. Lee.
The US and South Korea are optimal partners for establishing stable supply chains because they “can trust each other more,” Yoon said Tuesday at the US Chamber of Commerce. He praised “friend-shoring” — a US effort to reduce reliance on China for critical goods — calling it more important than ever.
Yoon is also seeking to balance his country’s main security ally with its biggest trading partner — China — even as Biden pushes South Korea to take a harder line against Beijing. South Korea’s chips, batteries and other products have become even more important strategically as the global economy struggles with inflationary shocks stemming from supply shortages.
Biden’s chips and climate bills, which offer tens of billions of dollars in subsidies, have attracted South Korean firms while pressuring them to refrain from expanding investment and production in China. At the same time, South Korean companies such as Samsung and SK Hynix Inc. are under pressure to move advanced equipment out of China despite winning a one-year reprieve to sweeping US export controls unveiled in October.
Money flows have already been shifting: South Korea’s trade deficits with China have grown of late, while Samsung’s share of China’s smartphone market has essentially been erased. The country’s chip sales are also declining as China ramps up production.
The US, meanwhile, may surpass China this year as a top destination for South Korean exports for the first time in two decades.
“Trade flows are being affected by geopolitical preferences and geopolitical tensions,” said Wendy Cutler, Asia Society Policy Institute vice president who once led trade talks with Seoul. “We’re going to be seeing some real profound changes over time.”
The nations are also looking to boost military cooperation apart from North Korea.
Just ahead of the visit, Yoon indicated his government may be open to changing its policy about providing lethal aid to Ukraine under certain conditions. South Korea holds one of the world’s largest stockpiles of artillery shells, and Ukrainian President Volodymyr Zelenskiy has long sought weapons as his military suffers chronic shortages of ammunition.
While Russia has threatened retaliation if Seoul goes ahead with such a move, it could mark a new chapter in security cooperation.
“It would reaffirm that the allies are on the same page on issues beyond the North Korea challenge,” said Soo Kim, a former Korea analyst at the US Central Intelligence Agency, who now works at US-based management consulting firm LMI.
Russia’s war has opened a door for South Korea’s defense exports, which were on track to more than double in 2022 as European nations in particular seek to replace Soviet-era weaponry with higher tech arms.
Yoon has asked the US to boost its extended deterrence against a North Korean strike and has faced pressure at home to consider building nuclear weapons. While he may look to win a greater say on how the US manages its nuclear umbrella, a push for atomic weapons would risk a crisis in the alliance and sanctions that jeopardize the nation’s civilian nuclear program, which is forecast to account for almost one-third of electric generation capacity by 2030.
Biden and Yoon plan to release a statement that will “send a very clear and demonstrable signal” over the US commitment to extend deterrence in defense of South Korea, National Security Advisor Jake Sullivan said Monday in a briefing, touting Seoul as a “good steward of its non-proliferation obligations.”
–With assistance from Sohee Kim and Jeong-Ho Lee.
(Updates with comment from Yoon in seventh paragraph.)
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