Korea-US Economic Alliance and Tasks To Be Advanced After the Moon Jae-in Administration

On Friday, October 29, CSIS and the Smart Women, Smart Power Initiative hosted a private, off-the-record roundtable with Minister Park Young-sun on the “Korea-US Economic Alliance and Tasks After the Moon Jae-in Administration.” Below is a script of her introductory remarks. 

First of all, I would like to thank President Hamre and Dr. Cha for organizing the seminar today with me. Nice to meet all of you. Thank you for coming. I also would like to thank all the people joining on line. I do hope today’s seminar will serve as a small stepping stone to solidify the economic alliance between Korea and the US and the US Korea relationship.

It was 36 years ago, 1985, when I first came to US. It was during the Reagan Administration. At that time, the world’s attention was focused on the efforts being made by US to end the Cold War between the US and the Soviet Union.

In particular, what President Reagan said after his meeting with President Mikhail Gorbachev, quoting the Russian proverb, is still vivid in my mind. He said “Trust but verify.” I think this is still a very appropriate wording for South and North Korean relations.

It was also when Korea was exporting a very small Hyundai automobile named “PONY” for the first time in history to the US. At that time, I recall that the Washington Post wrote about two automobiles newly landed in America, the Hyundai PONY from Korea and the national car from Yugoslavia, the “Yugo.” I remember the title was “How long can these two cars survive on American soil?”

10 years later, 1995, I came to Los Angeles as a special correspondent for MBC TV of Korea and I covered Silicon Valley a lot. Silicon Valley not only gave me a lot of curiosity, but also gave me a lot of insight as well.

Former US Secretary of Defense William Perry’s policy to support Silicon Valley gave me a lot of guidance when I later became the Minister of the Ministry of SMEs & Start-ups in Korea in establishing our start up support policy in Korea.

Another unforgettable thing I recall from 1995, 26 years ago, was an article published by the Los Angeles Times regarding the automobile industry. Under the title of “Only the World’s Big 5 Automakers Will Survive,” it had a critical view questioning if Hyundai Motor from Korea will survive.

In addition, as an official correspondent for the Motion Picture Association of America, I was wondering when a Korean movie would be able to receive the Oscar Award.  But, 25 years later, last year 2020, the fact that Director Bong Joon Ho’s “Parasite” was honored to receive the award put my questions to rest.
1. Climate Change and Energy

The changes over the last 30 years have been astonishing. 30 years ago, companies such as SHELL, EXXON were the most successful companies. But, nowadays, companies such as Google, Apple and Microsoft have replaced them. This is a good example of the conversion from the oil economy to the data economy.

If Korea-US relations have also developed, from a military alliance to sharing the value of democracy; now, we need another new upgrade,  to the Korea-US economic alliance.

Despite the fierce opposition from certain sectors in Korea, the Korea - US FTA which has been promoted during the Roh Moo-hyun administration became a big stepping stone for the economic alliance between the two countries. The economic and technology alliance, which goes  beyond the military alliance, was announced by  President Moon Jae In and President Biden last May shows clearly the direction that the two countries should go after the COVID-19 pandemic.

Among many problems brought by climate change, I think we will be able to create a better world if Korea and US work together as partners to find solutions for energy issues. This is because, from the perspective of Korea, the energy problem is directly related to the coal power problem in neighboring China and it is also linked to US interest in climate change and carbon neutrality. 

In early October, I met with Professor Richard Lester, Associate Provost, who is a professor of nuclear science and engineering at MIT.  It was impressive that he emphasized mutual cooperation between Korea and the US on SMR (Small Modular Reactors). Professor Lester said, “the quickest way to achieve carbon neutrality is to utilize SMR going forward,” emphasizing the need to cooperate with Korean companies. Dr. Ernest J. Moniz who served as the Secretary of Energy in the Obama Administration also agreed with this view wholeheartedly.

This issue was also comprehensively mentioned in the Korea - US joint statement last May and it is expected to become an important agenda item for the new administration after the Moon Jae-in administration.

In particular, the Democratic Party’s presidential candidate, Mr. Lee, Jae-myung, considers “climate change and energy issues” as an important agenda for the new government.

Therefore, today, I would like to invite and listen to the opinion of experts in this field in the US.  
2. Korea-US Bilateral Semi-conductor Cooperation Strategy

If SMR in the context of the climate change and energy problem is creating a new history between Korea and US, the semiconductor issue also has a long history between the two countries.

In this long history of the semiconductor which has been accumulated between Korea and US, we are now facing a new turning point. First, the semiconductor occupies a significant part of future industrial policy competition between the US and China. Secondly, it is also a delicate period surrounding the supply chain issue, such as with automobiles, etc., in the midst of a global supply shortage.

The strategy of the “Three Kingdoms” represented by the world’s three largest manufacturers, Samsung, INTEL and TSMC, is now unfolding. The fierce competition over Extreme Ultra Violet lithography (EUV) equipment is also accelerating the nerve warfare with China.

TSMC’s recent trend, which is not free from China, is strengthening its cooperation with SONY in Japan. TSMC which the Japanese government attracted with a large scale subsidies seem to be a part of the Japanese government’s determination to secure a competitive edge by restoring the eco-system of semiconductor manufacturing and reinforcing the strength of SONY’s image sensor sector. Intel is targeting Europe simultaneously trying to restore the ecosystem in the US. 

The US government is dealing with semiconductor production in terms of national security, so strategic cooperation between Korea and the US is more necessary. Treating the semiconductor issue as a matter of national security is also a technological competitiveness issue that goes beyond the supply chain problem. Accordingly, the Korean government’s support for semiconductors, like the US and Japanese governments’, appears to be needed in the future. Samsung which has focused on memory semiconductors is now increasing the proportion of non-memory system semiconductors.

I've been keeping an eye on NVIDIA's acquisition of ARM, which is leading in the Graphics Processing Unit (GPU) space. That is because, now, the key to semiconductors is designing according to the needs of consumers and how much they can be extremely ultra miniaturized using nano technology. To that end, I believe that South Korea's Samsung should further strengthen its strategic alliance with American companies and startups that need semiconductors. This is because the chip design requires domain knowledge, that is, technical knowledge based on experience and creativity. Also, it is time for American companies to strengthen their mutually complementary and cooperative relationship by increasing their investment in materials, parts and equipment in Korea.

Building factories and creating jobs in the United States, along with strengthening strategic alliances with American companies in need of semiconductors, will upgrade the new Korea-U.S. economic alliance.  A good example is when LG and GM; they recently created a WIN WIN situation by becoming partners in battery production filling each other’s shortcomings. Therefore, I think that a task force or committee for strategic alliance between Korea and the US should be actively sought in the future.

3. Bio Cooperation between Korea and US after the COVID-19 Pandemic

With the outbreak of COVID-19, bio cooperation between Korea and the United States has become more important.

Biotechnology is also an area in which the United States has a clear advantage. In particular, I give high marks for the focus of the US government, which spurred the development of mRNA vaccines. At that time, as the Minister of SMEs and Startups, I collaborated with Pfizer in the US to distribute the vaccine by enabling mass production of LDS (Low Dead Space) syringes for which a Korean small/ medium company has a patent.

I have also discussed the issue of setting up a production plant and a R&D research center in Korea with the venture company Moderna.

When I visited Boston, I saw that the research on Neuroscience was very active. In addition, I learned  that the research on Synthetic Biology such as mRNA as well as SIRNA has progressed considerably.  In particular, the bio field is expected to make a leap forward in the future as it is interlocked with quantum computing. It seems that the proportion of the BIO economy among economic sectors is expected to increase significantly.

In the field of bio technology, individual competency in Korea is also outstanding. Therefore, I think that the new administration should focus on how to weave these individuals’ outstanding competency into something like the Boston bio cluster. We need to connect the Korean bio start-ups, which reflects individual competency with  large US enterprises. Also, I think we should focus more on converging the capital of large corporations and the start-ups and weaving individual capabilities and technologies together. If Korea and US cooperate in the bio field, the two countries will be able to make a greater contribution for mankind.

I also think that it may be necessary to establish a bio research institute in Boston funded by Korea. Just as Synthetic Biology is the blue ocean of the future, the bio field is especially so because concentration and connection are important.

There are other things that I would like to talk about more, such as the cooperation between Korea and US in the field of quantum computing and aerospace development. However, I will save it for a future opportunity. I hope my presentation today provides a bit of help to advance the Korea-U.S. economic alliance to the next level.

I am all ears and hoping to listen to the opinions of the experts gathered here today. Thank you.

Park Young-sun

Former Minister of SMEs and Startups of the Republic of Korea