2019 JOINT STATEMENT: U.S-Korea Business Council and Korea-U.S. Business Council

Friday, October 11, 2019 - 3:30pm

2019 JOINT STATEMENT
U.S-Korea Business Council and Korea-U.S. Business Council 
October 11, 2019 | Washington, D.C. 

Members of the U.S.-Korea and Korea-U.S. Business Council (the “Councils”) held the 31st Annual Joint Plenary Meeting in Washington, D.C. on October 11. The Meeting assembled senior business leaders from the United States and Korea to discuss global trade trends, the impact of two-way trade and investment on small and medium sized enterprises (SMEs), and the next-generation of U.S.-Korea commercial collaboration. In addition, the Councils discussed sectoral challenges and opportunities related to digital technologies, the Fourth Industrial Revolution, and healthcare. 

While the conversations largely focused on commercial relations, we understand that the U.S.-Korea relationship is multifaceted and it is often hard to separate the commercial elements from broader geopolitical developments. We also believe that at a time of increased geopolitical uncertainty in Asia, any deterioration in the alliance—whether economic or political—will undermine the ability for our two governments to cooperate on a host of issues. To this end, the Councils have long held the view that the U.S.-Korea Free Trade Agreement (KORUS) has played a critical role in supporting the U.S.-Korea alliance, and we encourage the two governments to avoid actions that would undermine its effectiveness and to take appropriate actions to strengthen it even further.

Additionally, the Councils discussed the role of geopolitical developments related to emerging and foundational technologies such as 5G and AI, and stress that there is a need for continued government-to-government and public-private dialogue between our two economies. As challenges emerge, we believe that the long-standing and hard-earned trust between our two economies should play a key role in mitigating uncertainty that stems from geopolitics. We are always willing to share our views on the impact that such developments have on our businesses. 

Based on these shared views, the Councils believe the following recommendations will help strengthen the commercial ties, and in turn, the overall U.S.-Korea relationship. We recommend that the U.S. and Korean governments: 

1. Continue to remove bilateral trade irritants. The U.S.-Korea trade and investment relationship remains one of the strongest in the world. Two-way trade in goods and services continued to grow in 2018 to over $167 billion. While KORUS has been critical to this growth, there are a handful of trade barriers—some related to FTA implementation and others outside of the agreements’ scope—that need to be resolved. The Councils encourage both governments to continue to remove these barriers, particularly as they relate to customs and trade facilitation, competition related issues, and the healthcare, automotive sectors, and chemical sectors, among others. Additionally, the Councils believe that Korea’s automotive industry should receive a formal exemption from the threat of auto tariffs under the Trade Expansion Act Section 232. 

2. Pursue efforts that strengthen and promote the rules-based global trading system. The United States and Korea are leaders in promoting economic growth and integration in Asia. To this end, the Councils encourage the two governments to work collaboratively through regional- and international-forums such as APEC, the OECD, and the WTO on a range of emerging and long-standing challenges. We encourage both governments to remain supportive of efforts in these forums to address emerging challenges related to infrastructure, data, cybersecurity, and digital taxation, as well as the WTO’s ongoing efforts to address market-distorting measures, to pursue needed reforms, and to ensure that the Dispute Settlement system is functioning effectively.

3. Take steps to improve the business environment for both SMEs and multinationals. Despite the fast growing bilateral investments between the two countries, economic and social linkages between multinational enterprises and SMEs are often overlooked. Yet spillovers of knowledge and technology are important contributions of foreign direct investment to economic growth and development. The Councils believe that both governments should pursue policies that seek to maximize these linkages by bolstering SMEs’ ability to develop them, and that the most effective strategy to do so is to create an enabling environment for investment. The Councils encourage both governments to pursue non-discriminatory approaches to regulation that foster a transparent and predictable business environment and ensure a level playing field for all firms, regardless of national origin or size. 

4. Aim to harmonize regulatory frameworks for cross-cutting and emerging industries. Regulators in both markets are actively contemplating regulatory questions related to artificial intelligence, machine learning, 5G, autonomous vehicles, and a whole host of other data and cybersecurity related challenges. As they do so, the Councils believe that sustained dialogue with the private sector is critical, and encourage the two governments to pursue harmonized, multi-lateral approaches to these issues, while accounting for the existing regulatory requirements placed on the private sector. To this end, the Councils share the view that divergent regulatory schemes are a persistent challenge for global businesses, and that overregulation can lead to non-tariff and technical barriers to trade. 

5. Leverage the private sectors’ experience and expertise to improve health outcomes and promote bilateral cooperation in biotech innovation. As both countries undergo fundamental demographic shifts, public demand for healthcare and financial support will continue to outpace government-funding capabilities. The Councils believe that the two governments should look to the private sector to meet this growing demand through enhanced public-private dialogues and the pursuit of policies that increase access to care and improve health outcomes. Additionally, we encourage continued cooperation in the innovative biotech industry, and ask the two governments to promote a competitive and fair-value chain that rewards innovation. 

6. Identify areas where the U.S. government’s Indo-Pacific Strategy and Korea’s New Southern Policy align. In particular, the Councils recommend prioritizing enhanced cooperation to address challenges in third markets related to data localization, local content requirements, investment restrictions, state-owned enterprises, excessive technical burdens to trade, forced technology transfers, intellectual property rights, and other non-tariff barriers.

As investors, employers, and business leaders operating in both countries, the Councils welcome the opportunity to provide our comments. We believe that acting on these recommendations will drive growth in both the U.S. and Korea and allow for continued commercial collaborations across our economies. We are pleased to provide further details related to each recommendation, and in particular related to the small number of trade irritants outlined in suggestion number one. 

The Councils agree to hold the 32nd USKBC-KUSBC Joint Plenary Meeting in the Fall of 2020 in Seoul.