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1. South Korea's Critical Moment in Digital Currency Policymaking: Between Regulating Cryptocurrencies and Launching a Central Bank Digital Currency (CBDC)

Author:
June Park
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Why is South Korea pilot-testing its Central Bank Digital Currency (CBDC), and what made it shift from non-issuance to consideration? This paper investigates the Bank of Korea (BOK)’s CBDC-related developments amid the geopolitical contest between the U.S. and China. It examines the Moon Jae-in administration’s defiance of decentralized finance (DeFi) and the BOK’s sudden shift from non-issuance to potential issuance, which led to expedited research, development, and pilot-testing of CBDCs. As in the case of the digital yuan, the BOK envisions a hybrid architecture for the digital won, wherein central banks and associated partner institutions are CBDC distributors, though they are distinguished by placing the digital won on distributed ledger technology rather than by centrally controlling it. However, South Korea’s previously rash decision to forego DeFi under an undemocratic process has deprived the country of the time and opportunity to develop new innovations as a leading country in the digital frontier. By sticking only to digitalizing centralized finance, the country now aims to be in “standby” mode for its CBDC launch if and when required, so as not to fall behind in digital financial architecture. This paper scrutinizes the South Korean government’s moves on crypto and CBDCs and argues that 1) the Moon administration has shown incapability in addressing DeFi amid the crypto boom and bust, and 2) the BOK’s shift from non-issuance to potential issuance of the digital won is driven by its interest to uphold central bank independence amid swaying geopolitics between the U.S. and China and an unpredictable upcoming presidential election in South Korea.
Topic:
Economics, Elections, Finance, Cryptocurrencies, and Digital Currency
Political Geography:
China, Asia, South Korea, North America, and United States of America

2. 2021 Report on American Attitudes towards the U.S.-ROK Alliance and North Korea Policy

Author:
Troy Stangarone and Juni Kim
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
KEI’s 2021 Report on American Attitudes on the U.S.-ROK Alliance and North Korea Policy summarizes results from a survey commissioned by KEI and conducted by YouGov on May 6th to May 10th, 2021 in advance of the U.S.-ROK summit on May 21st, 2021. The survey asked Americans their views on the U.S.-South Korea relationship, North Korea policy, and the U.S.’ role in the East Asian region.
Topic:
International Relations, Security, Foreign Policy, Economics, and Domestic Politics
Political Geography:
Asia, South Korea, North America, and United States of America

3. Taiwan’s Shifting Role in the Global Supply Chain in the U.S.- China Trade War

Author:
Jinji Chen, Hong-yu Lin, and Yi-ting Lien
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The U.S.-China trade war and the pandemic have had a profound impact on cross-border supply chains. In the past few years of U.S.-China tensions, China has been accused of engaging in unfair competition by abusing its national power, from trade and technology to COVID-19 responses. Amid such accusations, some countries have been stepping back from cooperating with China due to national security concerns. As the lockdowns have further disrupted value chains and highlighted the vulnerability of global supply chains, enhancing supply chain resilience has now become a national imperative for the U.S., Japan, and other countries, with an emphasis on strengthening their production capabilities in the semiconductor and medical care industries.
Topic:
Economics, National Security, Trade Wars, and Supply Chains
Political Geography:
China, Taiwan, Asia, North America, and United States of America

4. The Future of U.S. Supply Chains: National Security and the Pandemic

Author:
Troy Stangarone
Publication Date:
07-2021
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The COVID-19 pandemic has been the most significant economic disruption to the international economy since the Great Depression. The IMF estimates that the global economy contracted by 3.5 percent last year, while the WTO has projected a 5.3 percent decline in global trade. The economic impact on the United States has been significant as well. Early in the pandemic the United States experienced shortages of critical medical supplies and products, while the need to social distance has continued to place restrictions on the overall economy. For 2020, the pandemic saw GDP decline by 2.3 percent, while exports fell by 12.9 percent and imports by 6.4 percent. All of this has resulted an increased focus on supply chains and their vulnerabilities.
Topic:
Economics, National Security, COVID-19, and Supply Chains
Political Geography:
China, Asia, North America, and United States of America

5. Joint U.S.-Korea Academic Studies 2020

Author:
Gilbert Rozman, Mark Tokola, Gilbert Rozman, Dmitri V. Trenin, Yuki Tatsumi, Kathryn Botto, Rush Doshi, Scott W. Harold, See-Won Byun, Cheol Hee Park, Brad Glosserman, Charles W. Boustany Jr., Matthew Goodman, Wonho Yeon, and Kitti Prasirtsuk
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The experts in this volume have thoughtfully addressed themes that are pervasive throughout Asia and are timely for the U.S.-Korea alliance. With the future of Northeast Asia in flux, political leaders are hoping to transform their respective visions into the path forward for the region. Authors in the first section analyze the frameworks of U.S. President Donald Trump, Chinese President Xi Jinping, Russian President Vladimir Putin, Japanese Prime Minister Abe Shinzo, and South Korean President Moon Jae-in to discern the currents underlying geopolitical developments in the region. The second section examines the role of national identity in key bilateral Indo-Pacific relationships where geopolitical fault lines have become clearer. Chapters in this section cover the India-China, U.S.-China, South Korea-China, and South Korea-Japan dyads. The final section provides insights into how several of China’s neighbors and the United States are responding to its economic rise, which, of course, are also guided by strategic concerns. Considering how COVID-19 has exacerbated the rivalry between Washington and Beijing as well as the influence this relationship carries in shaping the future of the region, the contributions here are particularly relevant and timely.
Topic:
International Relations, Security, Economics, and Domestic Policy
Political Geography:
Japan, China, Asia, South Korea, North America, and United States of America

6. 2020 Report on American Attitudes Toward the Korean Peninsula

Author:
Troy Stangarone and Juni Kim
Publication Date:
09-2020
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
KEI’s 2020 Report on American Attitudes Toward the Korean Peninsula focuses on U.S. views on relations with South Korea, U.S. awareness of South Korean brands and cultural products, and views on North Korea and was conducted by YouGov. The results reveal that while Americans have a favorable view of South Korea and about half are supportive of maintaining U.S. troops on the Korean Peninsula, few Americans watched or listened to Korean cultural products in the last year. Americans also view North Korea as one of the three critical challenges for the United States, but fewer than 1-in-3 approve of the administration’s handling of North Korea.
Topic:
Security, Foreign Policy, Economics, Human Rights, Politics, Culture, Public Opinion, and Domestic Policy
Political Geography:
North America, Korean Peninsula, and United States of America

7. China’s Economic Rise amid Renewed Great Power Competition, America’s Strategic Choices

Author:
Charles W. Boustany Jr.
Publication Date:
06-2020
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
American ideals coupled with the commercial self-interest of American business and industry drove the policy of engagement, and even after the 1989 massacre of student protesters at Tiananmen Square, sustained momentum for China’s accession into the WTO. Despite China’s known unfair trade practices, it was thought that problems would eventually disappear as China adopted rules and norms as conditions of its accession to the WTO while deepening its integration into the global trading system. Yet, despite this strategy of engagement, China has not implemented expected substantive structural reforms consistent with the spirit, if not the letter, of its WTO obligations.
Topic:
International Relations, Security, Foreign Policy, and Economics
Political Geography:
China, Asia, North America, and United States of America

8. Finding an Advocate: The Role of the Private Sector in Korea-Japan Relations

Author:
Jiwon Nam and Kristin Vekasi
Publication Date:
06-2019
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Tensions between South Korea and Japan are frustratingly persistent. Despite the shared interests of both countries, such as economic development in Southeast Asia, and keeping a robust alliance with the United States, South Korea and Japan maintain a bellicose relationship because of unresolved historical misunderstandings and territorial disputes. Inconsistent diplomatic policies and lack of strong leaders have made it difficult to prevent unnecessary hostility between South Korea and Japan. Fear of losing support has prevented politicians from pursuing friendly policies towards each other. Businesspeople, too, have been reluctant to pursue friendly policies towards each other, because of preconceived risks of being targeted for backlash. An examination of economic data shows these risks are minimal, and political tensions do not affect business or consumer behavior. Current efforts from both Korean and Japanese business organizations to improve cooperation include student exchange programs, recruitment processes, and public diplomacy. We urge the business community to advocate more to improve bilateral relations. Economic relations alone are insufficient to handle the task of improving a difficult relationship; there is also a need for leadership. In South Korea-Japan relations, the business community should step in and provide that role.
Topic:
Economics, Bilateral Relations, Business, and Private Sector
Political Geography:
Japan, Asia, South Korea, North America, Korea, and United States of America

9. The U.S. Indo-Pacific Strategy and Its Implications for U.S.-ASEAN Economic Governance Architecture

Author:
Kaewkamol Karen Pitakdumrongkit
Publication Date:
07-2019
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
During his visit to Asia in November 2017, President Donald Trump announced his vision of a “Free and Open Indo-Pacific” as the U.S. approach to the region. The Department of State unveiled in detail the economic elements of the Indo-Pacific strategy in April 2018. These economic policies were reiterated by Vice President Mike Pence at the Asia-Pacific Economic Cooperation (APEC) CEO Summit in Papua New Guinea in November 2018. For instance, Pence maintained that Washington plans to “make bilateral trade agreements with any Indo-Pacific nation that wants to be our partner and that will abide by the principles of fair and reciprocal trade,” promote private sector investment, and assist regional states on sustainable infrastructure development. On December 31, Trump signed into law the Asia Reassurance Initiative Act (ARIA) passed by the U.S. Congress earlier that month. ARIA further advances the strategy by mandating the executive branch to “develop a long-term strategic vision and a comprehensive, multifaceted, and principled United States policy for the Indo-Pacific region.” Moreover, the text authorizes $1.5 billion to “the Department of State, United States Agency for International Development [USAID], and, as appropriate, the Department of Defense . . . for each of the fiscal years 2019 through 2023, which shall be used” to achieve several objectives including ensuring “the regulatory environments for trade, infrastructure, and investment in partner countries are transparent, open, and free of corruption.” Against this backdrop, this chapter examines the effects of the U.S. Indo-Pacific strategy on the future of U.S.-ASEAN economic governance architecture. “Strategy” refers to “the collection of plans and policies that comprise the state’s deliberate effort to harness political, military, diplomatic, and economic tools together to advance that state’s national interest.” Such a study is warranted for a few reasons. First, the jury is still out on the degree to which this strategy would align or clash with different approaches and policies supported by Southeast Asian governments. Clashes of ideas and policies can result in not only failed implementation of the U.S. strategy but also competing economic initiatives which could undermine the future of U.S.-ASEAN trade and investment ties. Therefore, this research is aimed at: 1) assessing how the U.S. Indo-Pacific strategy would interact with Southeast Asian nations’ policies to shape the future development of regional economic architectures, and 2) forging policy recommendations for the U.S. and ASEAN governments on how they could jointly pursue regional economic institution-building. The questions I explore include: 1) What are the economic components of the U.S. Indo-Pacific strategy? 2) How will this strategy and Southeast Asian countries’ economic agendas/policies interact to shape the future advancement of regional economic architecture? and 3) What should American and ASEAN governments do to foster cooperation and lessen conflict among their different policies regarding economic regionalism? The chapter is organized as follows. The next part discusses the economic components of the Indo-Pacific strategy under the Trump administration. The second section examines the interactions between this strategy and the economic agendas of the Association of Southeast Asian Nations (ASEAN) to highlight the areas of complementarities and clashes. The last section provides policy recommendations for American and Southeast Asian governments to augment synergies and ameliorate clashes among their policies.
Topic:
Foreign Policy, Economics, Governance, and ASEAN
Political Geography:
Asia, North America, United States of America, and Indo-Pacific

10. U.S.-China Economic Relations Under the Trump Administration at the 2-Year Mark

Author:
Peter Harrell
Publication Date:
07-2019
Content Type:
Journal Article
Journal:
Joint U.S.-Korea Academic Studies
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Since entering office in 2017, President Trump has upended longstanding tenets of U.S. trade policy and launched the most aggressive set of new U.S. tariffs and trade restrictions since at least the Reagan administration in the 1980s. Actions include renegotiating the U.S.-Korea FTA (KORUS) and NAFTA, using “Section 232” of the Trade Expansion Act of 1962 to impose tariffs on most steel and aluminum imports into the U.S. in a bid to support U.S. smelters, using “Section 301” of the Trade Act of 1974 to impose tariffs on approximately half of U.S. imports from China, and threatening to use Section 232 to impose tariffs reportedly up to 25% on U.S. imports of automobiles. The administration’s aggressive stance on trade has upended diplomatic relationships and prompted multinational companies to re-consider aspects of their global supply chains. It has also brought retaliation, including Chinese tariffs on most Chinese imports of U.S. goods. European countries and other U.S. allies affected by Trump’s steel and aluminum tariffs have also retaliated with tariffs of their own against imports of U.S. goods, with many of the retaliatory tariffs targeting perceived politically important constituencies in the U.S., such as U.S. whisky distillers, who are heavily concentrated in the home state of Republican Senate Majority Leader Mitch McConnell. But Trump’s aggressive trade policies also began to deliver some successes in 2018, including a successful renegotiation of NAFTA, now renamed the U.S.-Mexico-Canada Trade Agreement (USMCA), a renegotiated Korea-U.S. FTA, and at least some willingness by European and Japanese officials to discuss greater market access for U.S. products. While many major U.S. importers and trade associations have complained about the tariffs, the tariffs continue to draw support from several of the key constituency groups that they are intended to assist, such as the U.S. steel industry. While U.S. tariffs against imports from allies are seemingly driven largely by the Trump administration’s general protectionist bent, Trump’s trade actions against China reflect a broader set of concerns that is more widely supported by members of the United States congress and American experts outside of government. These include both longstanding U.S. concerns over Chinese trade practices and market access barriers, and growing U.S. geopolitical competition with China—what the Trump administration’s National Security Strategy, released in December 2017, refers to as the return of “great power competition.” These geopolitical concerns have been central to the administration’s recent aggressive efforts to block the deployment of Huawei telecommunications technologies in new “5G” mobile communications networks around the world, and in the administration’s increasingly vociferous opposition to China’s “Belt and Road Initiative" (BRI). And because of increased U.S.-China geopolitical competition, U.S. use of targeted trade controls, investment restrictions, potential targeted sanctions, and other measures against China, will likely continue even if, as is widely expected, Trump and President Xi reach a broad agreement on many trade issues in the coming months and reduce some of the tariffs that are currently in place.
Topic:
Economics, Bilateral Relations, Tariffs, and Trade
Political Geography:
China, Asia, North America, and United States of America