Status of Korea’s Agricultural Cooperation with ASEAN and New Southern Policy

Status of Korea’s Agricultural Cooperation with ASEAN and New Southern Policy

Published: 2021.09.17
Accepted: 2021.09.13
135
Department of Agricultural Resource EconomicsCollege of Agricultural and Life SciencesKangwon National University, Korea

ABSTRACT

The conflict between the US and China is highly likely to have a negative impact on South Korea. In order to alleviate the external economic crisis caused by the global economic crisis, it is actively engaging in economic cooperation with ASEAN. In 2017, South Korea government announced the ‘New Southern Policy’ and established a plan to move away from the existing economic cooperation center with ASEAN and expand cooperation to various fields. At the ASEAN-Korea Summit held on November 12, 2020, President Moon Jae-in introduced the 'New Southern Policy Plus' based on the achievements of the existing New Southern Policy by reflecting the changed international environment such as the spread of COVID-19 and the demands of new southern countries. It is expected that Korea's interest in ASEAN countries will continue to grow in the future as trade and business exchanges increase. In the agricultural sector, ASEAN is ranked as the number one export destination of South Korea. Also, as a result of the conclusion and renegotiation of FTAs with individual ASEAN member states, the scale of trade, investments, and development cooperation between Korea and ASEAN is expected to further expand. In order for Korea to cooperate with ASEAN countries in the agricultural sector, it is necessary to fully consider the potential and development direction of ASEAN countries. Considering the situation facing small farmers in ASEAN, Korea needs to support the agricultural productivity and farm income increase of developing countries in ASEAN through the transfer of agricultural technology and support for rural infrastructure construction. In particular, it is important to support related education through the establishment of an agricultural technology training center and invitation and training of instructors in the field of technology consulting. Through this, ultimately, it is necessary to strengthen cooperation in agricultural science and technology with ASEAN countries and also form a single value chain between Korea and ASEAN.

Keywords: Korea-ASEAN, New southern policy, ODA, agricultural cooperation

BACKGROUND OF KOREAN ‘NEW SOUTHERN POLICY’

Recently, as the trade environment with the United States and China (G2), the two pillars of Korea's foreign trade, deteriorated and the trade dispute between the United States and China intensified, the sense of crisis for the Korean economy was amplified (Choi and Khoe 2019). The Korean economy grew by utilizing the US market until the 1990s and the Chinese market after the 2000s (Sohn, 2019). However, a high dependence on trade with a specific country makes its economy vulnerable to risks caused by changes in economic and geopolitical relations with that country, and furthermore, it can have a negative impact on the domestic economy by reducing trade. The conflict between the US and China is highly likely to have a negative impact on South Korea, as it is still highly dependent on the US politically (Choi and Khoe, 2019). There are high concerns about the deterioration of Korea's G2 trade environment due to the trade dispute between the United States and China, rather than the bilateral relationship between Korea and China affecting trade (Sohn, 2019). In order to alleviate the external economic crisis caused by the global economic crisis, it is actively engaging in economic cooperation with newly emerging markets, ASEAN and India.

Accordingly, since the inauguration of the Moon Jae-in government in 2017, South Korea has been working to strengthen its cooperative relationship with the ASEAN. The government announced the ‘New Southern Policy’ and established a plan to move away from the existing economic cooperation center with ASEAN and expand cooperation to various fields and create a prosperous future community together. Similar policies are being implemented in Japan and Taiwan as well, but the 'New Southern Policy' expands Korea's economic cooperation with ASEAN, which was centered on simple goods trade, into service, investments and technology fields, and promotes cultural art and people-to-people exchanges (Yoo, Park and Cheong, 2020). It is different from the ASEAN policies of Japan and Taiwan.  

The New Southern Policy, along with the New Northern Policy, forms two major pillars in the ‘Korean Peninsula New Economy Initiative’, the new external economic initiative of the Korean government. The New Southern Policy is primarily aimed at expanding mutually beneficial cooperation in various fields other than economic cooperation with 10 Southeast Asian countries (ASEAN) and South Asia including India that connects them. The New Southern Region is an emerging economic zone with high growth potential although its per capita income is still low. Therefore, the Korean government believes that promoting mutually beneficial cooperation with them will help the sustainable growth of the Korean economy (Yoo, Park and Cheong, 2020).

According to the initiative of President Moon Jae-in, who visited the ASEAN region in November 2017, the New Southern Policy has set the vision to form a “people-centered peace community where people prosper together with ASEAN.” To this end, Korean government decided to attach high importance to ASEAN and approach ASEAN with a strategy differentiated from those of traditional major partner countries such as the US and China (Nicolas 2021). The Korean government has decided to build the ASEAN-Korea future community as a 3P community of people, peace and prosperity. In other words, with the goal of 'people-oriented public diplomacy', 'a peaceful community where the people are safe', and 'win-win cooperation where people prosper together', the plan is to focus on four major areas: transportation, energy, water resource management, and smart information and communication (Nicolas 2021).

STATUE OF KOREA’S AGRICULTURAL COOPERATION WITH ASEAN

According to the statistical data of the Korea Agro-Fisheries & Food Trade Corporation, in the agricultural sector, ASEAN is also ranked as the number one export destination in the country with US$ 1.49 billion in 2020, surpassing Japan with US$ 1.34 billion, the United States with US$ 1.21 billion, and China with US$ 1.14 billion. As a result of the conclusion and renegotiation of FTAs with individual ASEAN member states, the scale of trade, investments, and development cooperation between Korea and ASEAN is expected to further expand. Looking at the status of imports and exports of livestock products in each country, the net exporting countries are Indonesia, Thailand, Malaysia, Laos, and Myanmar, while the other countries are net importers (Figure 1, Table 1). Except for Indonesia and Thailand, the proportion of exports to imports is not high, but raw materials are mainly exported and processed products are imported.

Looking at Korea's export and import trends of agricultural and livestock products to ASEAN, most of them show a trade deficit with the exception of Cambodia, Laos, and Brunei (Table 2). In trade with Korea, with the exception of Singapore, ASEAN countries mainly export raw agricultural products and import processed products.

Agricultural and livestock products imported from ASEAN countries into Korea are mainly palm products, bananas, sugar cane, and nut products. By country, the proportion of imports of certain items is high (Table 3). Although Korea's direct investment in ASEAN's agriculture, forestry and fisheries is very small, it is judged that cooperation with investment in the food processing industry using each country's major products is possible. The total amount of investment from Korea to ASEAN countries has continued to increase since 2014, with Vietnam, Singapore, and Indonesia making the most investments in that order. Looking at the status of investment in agriculture, forestry and fisheries from Korea to ASEAN countries, Indonesia accounted for 82.5% of the total investments in 2019, accounting for the largest portion of investments (Table 4).

Official Development Assistance (ODA) is considered an important breakthrough in pioneering new markets for the Korean government, which is currently in a low-growth phase. Looking at the status of ODA in the agricultural sector that Korea invests in the ASEAN, Indonesia has the most over the past three years, followed by the Philippines and Vietnam (Table 2). In Malaysia and Thailand, the amount receiving ODA has decreased since 2015.

MAIN CONTENTS OF ‘NEW SOUTHERN POLICY’

As a full-fledged implementation system for the New Southern Policy in 2018, the Korean government implemented the Presidential Special Committee for the New Southern Policy under the direct control of the President to quickly implement the items agreed upon through summit diplomacy with ASEAN and to allow the people and businesses to feel the outcomes. This special committee supports Korean companies' entry into the new southern region infrastructure development project and manufacturing industry. In addition, it is developing projects to build a foundation for economic cooperation that is mutually beneficial and future-oriented with the ASEAN countries.

For the realization of the ASEAN-Korea future community of the New Southern Policy, the vision of realizing a people-centered community of peace and prosperity and the three goals of realization of a “people community”, “prosperity community” and a “peace community” were established (Presidential Committee on New Southern Policy, 2021).

First, in order to realize a ‘people community’, the goal was to promote mutual understanding through increased exchanges, and by 2020, the goal was to achieve 15 million mutual visitors per year. In order to realize a “prosperity community” the goal was to establish a mutually beneficial and future-oriented economic cooperation foundation for win-win growth, and to achieve US$ 200 billion in trade with ASEAN by 2020 (Nicolas, 2021). For the realization of a “peace community,” strategic cooperation was promoted, such as a tour of 10 ASEAN countries and a summit visit to Korea by 2019 with the goal of establishing a peaceful and safe regional security environment. In order to achieve the vision and goal of the New Southern Policy, 16 tasks were established (Presidential Committee on New Southern Policy, 2021).

First, a total of six tasks were set for the realization of the ‘people community’ (Presidential Committee on New Southern Policy, 2021). 1) Expand mutual visitors by developing and promoting tourism contents, enhancing tourism satisfaction, and preparing implementation measures such as visa simplification. 2) Expand interactive cultural exchanges by spreading ASEAN cultural and linguistic content, holding large-scale complex Hallyu events, and expanding activities of the ASEAN Cultural Center and the ASEAN-Korea Center. 3) Strengthen human resource capabilities through scholarship support projects in the New Southern Region, invitational training for university students, and expansion of exchanges between public officials and private experts in each field. 4) Contribute to strengthening governance by supporting capacity building of public administration by sharing public administration experience, supporting network establishment and exchange between civil society organizations, and improving anti-corruption and public administration systems. 5) Protect and promote the rights and interests of the citizens through immigration and of foreign workers, education for multicultural families, and improvement of medical services. 6) Support the improvement of the quality of life by promoting rural development projects such as Saemaul Undong for poverty eradication and strengthening self-reliance capabilities, and strengthening disease response capabilities through cooperation in health and medical development.

A total of five tasks were set for the realization of prosperity community (Presidential Committee on New Southern Policy, 2021). 1) Strengthen the institutional basis for promoting trade and investment by improving market access and easing non-tariff barriers through joint search for progress in multilateral and bilateral free trade agreements. 2) Participate in infrastructure development to enhance connectivity, such as expansion of bilateral and multilateral cooperation channels, expansion of cooperation centers, and support for Public-Private Partnership using ASEAN Global Infrastructure Fund, etc. 3) Expand support for SMEs to advance into the domestic market and enter promising markets such as agriculture and fisheries (K-Food, K-Seafood) and beauty (K-Beauty). 4) Enhance innovation growth capabilities through smart cooperation with new industries by building a global open innovation platform and cooperation in science, technology, and new industries to jointly respond to the 4th industrial revolution between Korea, ASEAN, and India. 5) According to each country's cooperation demand, a customized cooperation model is applied for high added value in key industries such as agriculture and fisheries, automobiles, steel, and petrochemicals.

A total of five tasks were set for the realization of a peace community (Presidential Committee on New Southern Policy, 2021). 1) Promote exchanges of high-ranking officials, such as leaders and ministers, with countries in the New Southern Region. 2) Strengthen cooperation for peace and prosperity on the Korean Peninsula by expanding the support of ASEAN countries to promote complete denuclearization of the Korean Peninsula, the establishment of permanent peace, and improvement of South-North Korean and Korea-US relations in a virtuous cycle. 3) Deepen cooperation in the defense and defense industry through comprehensive cooperation such as expansion of high-level exchanges between defense channels such as activation of the Korea-ASEAN defense consultative body, transfer of defense technology, and local production. 4) Jointly deal with terrorism, violent extremism, and cybercrime, and jointly respond to major non-traditional security-related issues such as marine terrorism and environmental issues such as garbage. 5) Support the improvement of resilience in the New Southern Region by strengthening disaster prevention and response capabilities in areas vulnerable to conflict, natural disasters and climate change.

EXPANSION TO ‘NEW SOUTHERN POLICY PLUS’

At the ASEAN-Korea Summit held on November 12, 2020, President Moon Jae-in introduced the 'New Southern Policy Plus' based on the achievements of the existing New Southern Policy by reflecting the changed international environment such as the spread of COVID-19 and the demands of new southern countries (Thuzar, 2021). The New Southern Policy Plus reorganized the existing cooperative projects into seven key cooperative areas through selection and concentration: 1) Health care, 2) Education/human resource development, 3) Cultural exchange, 4) Trade and investment, 5) Infrastructure development, 6) Future industries such as 5G, and 7) Non-traditional security.

One of the focus areas is comprehensive health care cooperation. In order to overcome the health crisis caused by the COVID-19 pandemic, the New Southern Policy Plus is focused on contributing to the improvement of health care capabilities and medical welfare, including the ability of the new southern countries to respond to corona infections. In the future, Korea government plans to promote comprehensive health and medical cooperation, such as not only providing quarantine products and related equipment, but also passing on quarantine experience, medical technology and knowledge, nurturing professional medical personnel and supporting the establishment of a health care service system (Thuzar, 2021). The second goal of New Southern Policy Plus is education and comprehensive human resource development between Korea and ASEAN. This plan includes a variety of projects, such as education and talent development, scholarship projects, and educational model sharing, beyond the simple promotion of mutual visitors. Through the New Southern Policy Plus, various education and human development projects such as sharing Korea's education model, expanding support for Korean language education, and customized professional technical manpower education and training programs will be promoted (Thuzar, 2021).

The third goal of the New Southern Policy Plus is to form a cultural community based on cultural intimacy and similarity between Korea and the New Southern region (Thuzar, 2021). To promote interactive cultural exchange, Korea government plans to install a digital cultural experience center that can be operated non-face-to-face in Korea and in the new southern countries, and also establish new interactive cultural exchange platforms such as the ASEAN-Korea Cultural Heritage Cooperation Organization, Visual Arts Organization, and Film Organization. The fourth goal of New Southern Policy Plus is to continuously expand mutually beneficial trade and investment. In order to respond to the rapid economic recovery after overcoming COVID-19 and the reorganization of the global value chain (GVC), Korea government plans to create a policy environment for expanding trade and investment and support the strengthening of the capabilities of small and medium-sized enterprises (SMEs), which account for the majority of the economy of the New Southern region.

The fifth goal of New Southern Policy Plus is to set one of the seven key strategies to develop infrastructure, which is in high demand in the New Southern countries, and to support the development of underdeveloped areas in the New Southern region by sharing know-how in rural development (Thuzar 2021). In addition, by promoting the sharing of Korea's technology and experience in infrastructure projects such as urban development, roads and ports in the New Southern region, and promoting Korea- Maritime Southeast Asian cooperation, Korea government plans to discover new cooperative projects such as island villages and coastal city development in Southeast Asian countries. The sixth goal of the New Southern Policy Plus is to expand the field of mutually beneficial economic cooperation by strengthening cooperation with the New Southern countries in the 4th industry such as 5G and AI, and future industries such as startups and non-face-to-face businesses (Thuzar, 2021). To this end, it plans to establish and operate a consultative body that supports companies' information sharing, R&D cooperation, human exchange and networking, a business forum in the future industry, and an R&D and technical support center. The seventh goal of the New Southern Policy Plus is to strengthen security in Southeast Asia, including environmental and climate change, disaster response, marine pollution, water management, and transnational crimes, and to strengthen the Mekong region's resilience by removing unexploded ordnance and landmines and enhancing biodiversity (Thuzar, 2021).

POLICY RECOMMENDATION

It is expected that Korea's interest in ASEAN countries will continue to grow in the future as trade and business exchanges increase. In order for Korea to cooperate with ASEAN countries in the agricultural sector, there are several considerations as follows. First, it is necessary to fully consider the potential and development direction of ASEAN countries. In addition, the desirable direction of agricultural cooperation between Korea and ASEAN countries should be considered. Finally, it is necessary to consider the situation facing small farmers in Korea and ASEAN and the direction to overcome it.

In agriculture, Korea needs to support the agricultural productivity and farm income increase of developing countries in ASEAN through the transfer of agricultural technology and support for rural infrastructure construction. In particular, it is important to contribute to human resource development by supporting agricultural education for developing countries in ASEAN. Although it is still in progress, it is necessary to support related education through the establishment of an agricultural technology training center and invitation and training of instructors in the field of technology consulting. Through this, ultimately, it is necessary to strengthen cooperation in agricultural science and technology with ASEAN countries. ASEAN countries will try to promote the simultaneous development of food processing and distribution industries for the sustainable growth of the agricultural sector in the future. Accordingly, it will be possible to achieve mutual prosperity by not only sharing Korea's experience in the relevant field and disseminating technology, but also forming a single value chain.

REFERENCES

Choi, D.S. and Khoe, K.I., 2019. "A Study on G2 Risk and Export Diversification: Focusing on Export Support System for SMEs", Journal of Convergence for Information Technology 9(10), 48-55.

Nicolas, F., 2021. The Economic Pillar of Korea’s New Southern Policy. Center for Asian Studies, Notes de l’Ifri, Asie.Visions 120

Presidential Committee on New Southern Policy. 2021. New Southern Policy (http://nsp.go.kr/eng/main.do), accessed online 2021.08.19.

Sohn, Y., 2019. "South Korea under the United States–China rivalry: dynamics of the economic-security nexus in trade policymaking", The Pacific Review 32(6), 1019-1040.

Thuzar, M., 2021. "The New Southern Policy Plus: What's New and What's Next?", KIEP Research Paper, World Economy Brief, 21-12

Yoo, J.H., Park, S.K. and Cheong, I.K., 2020. "The Impact of COVID-19 and Korea's New Southern Policy on Its Global Value Chain", Journal of Korea Trade, 19-38.

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