Skillful diplomacy needed to maximize economic interest
In March, U.S. President Joe Biden first proposed the Chip 4 Alliance, a technology partnership to build a semiconductor supply network.
The alliance, which comprises the United States, Japan, Korea and Taiwan, seeks to cement chip self-sufficiency by uniting the four nations' advantages. Their strengths are the U.S.' developing technology, Japan's equipment and materials, Korea's memory chip design and manufacturing and Taiwan's non-memory chip production.
So far, so good. The only problem was that it mainly aimed to contain China, Korea's largest trade partner, including semiconductors. Korea depends on China and Hong Kong for about 60 percent of semiconductor parts and material supply and sells a similar share of finished products to them.
That explains why Korea could not give America a clear and positive signal, despite the latter's repeated urging, beyond the August deadline.
Last Friday, Seoul gave its first "official" yes to the alliance.
"There is no need to exclude it (the alliance), and we intend to participate and fully reflect our interests," Industry Minister Lee Chang-yang said at a forum organized by an economic newspaper. "We can never lose the semiconductor industry, and we think of the Chip 4 alliance in that sense."
Lee's remark reflected the views of most experts here, who say Korea's participation in the alliance is "inevitable," industrially and diplomatically.
According to experts, Korea's joining it has clear short-term advantages. Most of all, Korea cannot do well without the U.S.' development know-how and the Japanese equipment and parts supply. Also, Korean chipmakers can maintain or widen their technology lead over fiercely chasing Chinese competitors while Washington keeps Beijing in check. After all, as the U.S. policy change shows, the era of free and fair trade is gone. Why not join the new, exclusive club when there are chances?
In the longer term, the story may be more complex.
If China concludes that Korea has left it for America, if only economically, Beijing will retaliate. Koreans saw how Beijing bullied Seoul when Korea deployed a U.S. missile shield system here years ago. Chinese Foreign Minister Wang Yi recently told his Korean counterpart in Beijing ― very undiplomatically ― not to join the alliance. China's top diplomat in Seoul also visited the governing party's semiconductor task force chief twice, jeering, "How about making it a 'Chip 5 alliance?'"
All this points to a difficult diplomatic challenge facing President Yoon Suk-yeol and his administration.
On the one hand, the Korean government must be able to point out the U.S. unilateralism and duplicity, singlehandedly or in concert with similar partners, including Japan, Australia and some European countries. Washington uses only sticks while giving no carrots, even dealing with allies if its economic interests are involved. However, it isn't very sure whether the Yoon government can and will do so. Since he took office, Yoon has vowed to go with the U.S. diplomatically and economically. Recently, the U.S. excluded Korean electric vehicles from its subsidy list.
On the other hand, Seoul must minimize the "China risk" while reminding Beijing that rude and arrogant behaviors will get it nowhere. Many had expected the Yoon government to announce a viable and sustainable China policy this past August, around the 30th anniversary of diplomatic ties. Yet, the government has done nothing except irritate Beijing unnecessarily.
Korea is no longer a small fry, diplomatically and economically. It should no longer be gripped by a "small and powerless country complex." This country can survive only under a fair and open trade system. It must advocate this globally with like-minded allies.
Industrially, the country must keep its technological superiority by helping the private sector and making pioneering investments. Nothing will be done if the government and its party remain mired in domestic politics. Opposition parties have their problems, but the governing bloc should take the final responsibility.
Do Yoon and his party expect patriotic citizens to do even their most basic jobs like the economy and diplomacy?
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