KIEP Newsletter Vol. 5 No. 21

KIEP Newsletter Vol. 5 No. 21 | October 27, 2017 | Print

KIEP Surmounting Global Challenges, Creative Response! Korea Institute for International Policy (ISSN: 2288-0348)

KIEP PUBLICATIONS

Promotion Strategy and Economic Effect of an Inter-Korean CEPA LIM Soo Ho and CHOI Yoojeong / World Economy Brief 17-20

This study examines the necessity and possibility of an inter-Korean FTA in order to expand inter-Korean economic cooperation and economic integration between the two Koreas. In the meantime, inter-Korean economic cooperation has been free of tariffs (zero tariffs) since 1992 in accordance with the principle of "domestic transaction," and has been tolerated by the international community. However, as the scale of inter-Korean economic cooperation increases and economic integration is discussed in a fuller context, it is expected to become inevitable for the international community to raise the issue of trade practices. Also in the long run, if North Korea joins the WTO, there is the possibility of a complaint being lodged against South Korea, a member of the WTO, by WTO member countries. In this paper, we propose a Closer Economic Partnership Arrangement (CEPA) as a new development model of inter-Korean economic cooperation that will secure international legal legitimacy and contribute to economic change in North Korea. According to this study, it would be desirable to conclude the CEPA between the two Koreas in the form of an inter-agency arrangement rather than an intergovernmental agreement. Also, given the dynamics of the relationship between North and South Korea, it is important for the two Koreas to secure the "irreversibility" of agreements reached by defining as much detail as possible during the initial negotiations.

Economic Challenges for Korea: Mega-Trends and Scenario Analyses Danny Leipziger, Carl J. Dahlman, and Shahid Yusuf / Policy Analyses 17-01

This paper aims to examine some plausible external shocks that can significantly affect Korea's economic future. It does so by analyzing game-changing scenarios that emanate from a candid assessment of the risks inherent in the global economy. It is based on the premise that it is extremely useful to plan for the less likely events, especially if those events are associated with significantly altered outcomes. These "Black Swan" occurrences are not as far-fetched as one may think, particularly for a country as vulnerable as South Korea.
It is for this reason that the report examines scenarios that might materially alter the policy choices facing Korean authorities in the medium term (2017-2022). These scenarios are analyzed in the context of relations between Korea and China, China and the United States and Korea and the United States.
The approach of the Report is to first examine major "mega-trends" of de-globalization, disruptive technologies, and greater global uncertainty, and in this context of "shifting sands" to build three game- changing scenarios that can substantially affect Korea.
There are three scenarios: A Trade War, initially between China and the United States but with global ramifications; a Troubled China, with significantly lower growth and trade implications; and a Global Meltdown, reminiscent of 2008-2009. We believe there are few countries for which this kind of analysis is more germane than for Korea. The Report aims to hasten further deliberation on the topics of risk and resilience in the Korean policy community to increase preparedness for events that could cause significant disruption to the Korean economy in the medium term.

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