Keynote Address by Wang Yunjong at ROK-U.S. Strategic Forum 2022

Wang Yunjong
Secretary to the President for Economic Security

The CSIS Korea Chair will be featuring a series of Korea Platforms with remarks from distinguished speakers. This keynote address is from the 7th annual ROK-U.S. Strategic Forum on June 6, 2022, CSIS Korea Chair's premier international forum bringing together policymakers, experts, and officials to discuss US-ROK alliance issues.

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Greetings Dr. Geun Lee, the president of the Korea Foundation, Dr. John Hamre, the president of CSIS, and all the distinguished guests who are attending this event both online and offline today. I would like to begin by congratulating the hosting of the seventh KF-CSIS Korea-U.S. Strategic Forum at a critical time in which the U.S. and Republic of Korea are developing into global comprehensive strategic alliance. And personally, it is a great pleasure and honor to deliver the keynote speech today.

The world is now undergoing a paradigm shift in the global economic order in a way that has never been experienced before. While we are still tending to our wounds from the COVID-19 pandemic and unprecedented inflationary pressure due to Russia’s unprovoked invasion of Ukraine and disruptions of global supply chains are mounting, deepening the concerns of consumers, the workers, businesses, and policymakers. Supply side shocks are surrounding semiconductors, various parts and components for manufacturing, critical minerals, energy, and food are becoming more common and complex. While demand-side shocks are usually more easily manageable because the central bank and governments can mobilize monetary and fiscal policy measures.

Furthermore, the structured factors, such as climate change and digital transformation, present both challenges and opportunities for the global economy. The common topic underlying all these issues is economic security. It is difficult to clearly define the concept of economic security. Generally speaking, economic security is a broad concept that includes the security of energy, food, health, and supply chain. For instance, the shortage of energy and food increases energy and food prices, affecting the economic livelihood of people. Yes, there are many, many factors to supply and demand shocks.

Recently, many nontraditional types of shocks emerged. Geopolitical, geoeconomic shocks, along with pandemic and natural disasters. We live in an era where we need to manage the economic vulnerabilities more properly and in a timely manner in order to ensure the security of nations and the livelihood of the people from an economic point of view. The principle of economic efficiency under free trade and international division of labor, which has prevailed in the global economy since the end of the Cold War, is being transformed into an economic security perspective based on stability and sustainability.

Disruptions caused by the pandemic were a wake-up call that remind us of the importance of economic security. In terms of production, manufactures found it difficult to secure workers and many necessary inputs for production. In terms of transportation and logistics, bottlenecks have caused further strain in the global economy. In short, supply chain disruptions have slowed economic activity, consequentially threatening our economic security. In response to such disruptions, private companies are struggling, focusing on strengthening the stability and resilience of their supply chains, shifting from a just-in-time strategy for maximizing efficiency to a just-incase strategy to reduce risks from unexpected disruptions.

Another important dimension in the economic security is the technology, the protection of advanced and critical technologies is being highlighted in the race for technological hegemony. Within this race, the power game is changing as well. Now it’s about which country has technological leadership, with growing importance of preemptory securing and protecting strategic technology and meeting international standards. Thus, securing technological leadership is a key element to maintain the traditional hard power, such as military and economic power and, at the same time, to play a leading role in the newly emerging industrial revolution, namely digital transformation and energy tradition.

The stability and resilience of the supply chain cannot be achieved by a single country alone. In addition to reshoring, which relocates the overseas production facilities to homeland, friend-shoring, which strengthens cooperation in supply and demand over strategic materials and technologies among like-minded countries, is becoming more and more important. The key is trust. We can enhance supply chain security by promoting mutual trust. The Korea-U.S. summit meeting on May 21st is recognized as an important milestone to further develop the alliance between the two countries from the economic and security perspective.

During the last 10 years, the Korea-U.S. alliance expanded from a traditional military alliance to an economic alliance to the Korea KORUS FTA. In particular, economic security and high-tech cooperation have been elevated to the main pillars of the ROK-U.S. alliance, as it demonstrated by the fact that the two leaders started their meeting at the Samsung Electronics semiconductor plant. Through the summit, the two countries agreed to establish an economic security dialogue between the national security councils to strengthen the ROK-U.S. economic security and technology alliance.

In the future, through such economic security dialogue, we will strengthen strategic communications on economic security matters between the two presidential offices and strengthen cooperation in supply chain in core technology fields. Sector by sector, the U.S. and Korea agreed to work together to build resilient and reliable supply chains by promoting cooperation in respect to the early warning systems and critical mineral sector and foreign exchange office to secure emerging and future technologies. Partnership for nuclear energy, quantum, and space technology will be greatly strengthened.

In addition, two countries decide to expand and strengthen cooperation on global economic agendas, such as climate change, health, and internet, as a global comprehensive strategic alliance. The Indo-Pacific Economic Framework, namely IPEF, for prosperity summit meeting that took place two days after the summit meeting between the two countries, Korea expressed its willingness to actively participate and provide fully support as one of the 13 founding members. At the meeting, President Yoon Seok-youl remarked that Korea has achieved rapid economic growth and development based on liberal democracy and market economy. Through the IPEF, Korea will share its experience and cooperate with the countries in the region. In particular, Korea’s core competence and our advanced technologies in the areas of supply chain, digital transformation, and clean energy, can contribute to ushering in an era of shared prosperity in the IndoPacific region.

As the IPEF is now in its infancy, Korea as a global pivotal state will continue to actively contribute to the development of the IPEF as a key platform for stressing regional economic security. Immediately after taking office, President Yoon Seok-youl emphasized that the economy is security, and security is the economy, establishing economic security as a key pillar of the new administration’s national policy objective. Accordingly, Korea is strengthening international cooperation at various levels, while reorganizing domestic systems to strengthen economic security.

First of all, the Office of Economic Security in charge of the economic security matters was established in the presidential office to coordinate the economic security related agendas and establish the strategies through collaboration with many ministries. This office will also be responsible for above mentioned economic security dialogue between the NSCs of the ROK and the United States. Under the prime minister’s office, the Cabinet plans to establish a public-private joint emerging security committee in charge of the emerging security issues, such as infectious diseases, supply chains, and climate change.

This emerging committee will be in charge of coordinating and reviewing the policies established and implemented by each ministry. To respond to the supply chain crisis, the basic act on supply chain management for economic security is also being prepared this year. This act plans to focus on institutionalizing the entire supply chain process, including supply chain risk, risk of detection, risk of prevention, and risk management. To this end, the legislation will include the establishment of a national basic plan for supply chain management, establishment and advancement of an integrated early warning system, expansion of the support for enhancing supply chain resilience, and the establishment of supply chain fund, and the response system in case of a crisis.

In parallel with domestic response, Korea will strengthen international cooperation to build a complementary system by participating in an economic consultative body among countries that share the universal values. I expect that IPEF will be the most important platform for such regional cooperation. We also expand our natural bilateral and multilateral economic agreements, and actively participated in discussions on digital economic norms and standards.

In Korea’s relations with China, our close neighbor and largest trading partner, we are strengthening substantive cooperation based on the principle of mutual respect and mutual benefit and equality. In particular, given the highly interconnected nature of the supply chain between Korea and China, it is necessary for Korea to work together with China to stabilize the supply chain, including by using the economic cooperation chapter of the Korea-China FTA. Having said that, supply chain disruptions, which is a major threat to economic security, cannot be solved by a single country alone. This is because the global supply chain is intertwined in multiple dimensions and is also linked to some sectors such as logistics and finance.

Therefore, solidarity and cooperation among countries with a complementary supply chain structure is more important than ever. Within their respective roles in the international division of labor, each country cooperates with other countries while taking advantage of their competitive advantages. In promoting cooperation, I think mutual trust is very important in order to remove factors that cause the fragmentation of the supply chain. The Korean companies, such as Samsung Electronics and Hyundai Motors are rapidly expanding their investment in the U.S. Those investment decisions are basically motivated by their own global business strategies for securing the U.S. customers. However, without mutual trust and strong commitment for further prosperity between the two countries, private sector’s big ambitions cannot be materialized.

I hope that today’s forum will serve as an opportunity to enhance the mutual trust and understanding between the two countries. Once again, I would like to thank the Korea-U.S. Strategic Forum for inviting me today. Thank you.

Wang Yunjong is Secretary to the President for Economic Security. Dr. Wang holds a Master's degree from Seoul National University; a Ph.D. in Economics from Yale University.