[Lee Jae-min] After $1tr in trade still much to do

The nationwide gold ring collection in Korea in November 1997 was an interesting phenomenon in the eyes of Westerners. Seeing the country undergoing unprecedented economic turmoil in the aftermath of the Asian financial crisis, ordinary people chipped in to rescue the country by donating gold rings that they kept at home.

Of course, piles of gold rings themselves may have hardly made a dent in the total borrowing of Korea from the International Monetary Fund, but it was the spirit of collective effort reflected in the campaign that made a true difference. Korea managed to overcome the financial crisis much sooner than expected and paid back the loans to the IMF ahead of schedule.

This would be hardly imaginable in other countries. In fact, there have been commentators comparing Korea’s effort back then and the lackluster reforms taken by some European countries in the midst of the recent economic crisis.

Well, such sweat and blood of all people have made Korea the ninth country to reach the milestone of $1 trillion in trade volume as of last week. It took Korea 23 years to leap from the $100 billion mark to last week’s $1 trillion point, faster than the eight other members of the $1 trillion club. And this is all the more commendable coming after two major financial crises in as many decades.

Last week’s achievement also makes us pause to appreciate the treacherous road ahead for Korea. As noted in the Doha stalemate and the surge of free trade agreements, a new paradigm of global trade is in the offing, and it is not clear yet how Korea will fare in this new paradigm.

Its start seems to have been good by concluding FTAs with major trading partners including the European Union and the United States, but the never ending domestic controversy shows the baggage, for better or worse, that Korea has to carry in the global race. Korea has gotten an advantage from its early start, but whether it will be able to continue to hold the lead is an open question.

Maybe “exports” are indeed running in Korea’s blood and it may end up finding a breakthrough for fast adaptation to the new environment. But all the surrounding uncertainties simply defy reliable prediction at the moment.

Besides, the export performance has been made possible by largely focusing on key export items such as commercial vessels, automobiles, semiconductors, information technology products and the like. If one or two items somehow falter in the future, the overall export performance will be directly affected. This would also mean that Korea’s domestic economy may stumble, as it is heavily dependent on exports.

In fact, some of these key export items are already within a striking distance of competing countries: a couple of bad years may easily change the fortune. When it comes to exports, competition has always been there, but more fierce competition awaits Korea.

It is also true that, to many ordinary people, the news of $1 trillion sounds like a story of a different world. Unfortunately, the general export performance is not always translated into a comparable improvement of the economic situations of individual households. While Korea as a nation may have registered a remarkable achievement, a widening gap between those financially privileged and those not is being observed.

Unless the deepening polarization is adequately addressed before it is too late, true advancement of Korea will remain elusive despite the increasing trade volume it registers. With social division running deep, another gold ring collection in the face of a future national emergency would never happen.

Joining the $1 trillion club is indeed an important milestone for Korea. But maybe this achievement simply reflects the inertia of the past hard work that we have put in, which may not vouch for a continued success in the future, in a changed and volatile environment. This is an occasion for a small celebration and big contemplation on the remaining tasks: bracing for a changing paradigm and solving chronic problems for another leap.

By Lee Jae-min

Lee Jae-min is a professor of law at the School of Law, Hanyang University, in Seoul. Formerly he practiced law as an associate attorney with Willkie Farr & Gallagher LLP. ― Ed.