Paper studies the reform of the WTO Appellate Body (AB) and the implications in regard to the WTO members’ trade policies and their strategic use of the WTO Dispute Settlement Process (DSP). Based on an analysis of the 2020 USTR report on the WTO AB, we characterize two main criticisms leveled by the US against rulings of the WTO AB ‒ namely, the WTO AB’s activist role in interpreting WTO agreements, and the standard applied when reviewing issues of the respondent’s domestic law. We employ a game theoretic model which extends Maggi and Staiger (2011) by allowing the WTO AB to make a strategic decision maximizing the number of proper rulings based on a noisy signal, which is correlated with the trading countries’ joint payoffs. We find that as the signal the WTO AB receives is noisier, disputing parties have more incentives to engage in the DSP. Also, by assuming that reviewing domestic law negatively affects the respondent’s payoff when the country fails to receive a favorable ruling at the AB, we show that the respondent will become reluctant to go through the DSP even if its chance of winning in the arbitration process is not low. Arguably, the reform of the WTO AB leads member countries to choose more opportunistic trade policies while less number of disputes arise via the DSP. We review a number of WTO disputes cases to support our findings. Applying our analysis to the ongoing U.S. - Safeguard Measure on PV Products and U.S. - Safeguard Measure on Washers disputes cases, we conclude that arguing parties’ litigation responses may crucially depend on how the (reformed) WTO AB will deal with the issue of the “unforeseen developments” requirement in GATT 1994 - Article XIX.

This report analyzes migration and labor market in the European Union (EU henceforth). First, the EU’s and major European countries’ regulations and institutions on migration are analyzed, and some stylized-facts are established. Comparing these stylized-facts with the Korea counterparts, it offers policy implications for Korea. Also, main features of the states of migration in the EU are described, to deepen the understanding of the situation. A major interest regarding immigration, in Korea as well as in the EU, would be its impact on labor market in destination countries. To help better understanding on this, the impact of immigration on the recipient labor market is estimated, using the data from the EU. By doing a comprehensive analysis, this report aims to deepen the understanding on migration and labor market in the EU, derive policy implications for Korea, and offer a reference to assess the impact of an increase of immigration on the Korean labor market.

   Given its geostrategic position and growing importance in the world economy, the Indo-Pacific region has attracted many major powers to actively engage with the region. With the unveiling of the New Southern Policy (NSP) in 2017, Korea has also sought to upgrade its relations with ASEAN and India by boosting economic ties, socio-cultural exchanges and cooperation in the area of peace and security. While an earlier version of the NSP focused on bilateral cooperation with targeted countries, it gradually began to explore opportunities to collaborate with other players in addressing the needs of ASEAN and India. In particular, as the United States seeks cooperation with its key allies in forging the Free and Open Indo-Pacific Strategy (FOIP), there has been growing interest in the search for convergence between the FOIP and the NSP. Initially, the Korean government took an ambiguous stance toward the U.S.’s new policy, but in 2019 the two governments agreed to work together by building synergies between the NSP and the FOIP. Nevertheless, given the strategic nature of the FOIP as a counterbalance to China’s Belt and Road Initiative (BRI) and the attendant concerns in Southeast Asia about being embroiled in U.S.-China rivalry, close collaboration with the FOIP poses some challenges for the NSP, whose primary objective is to win the heart of targeted countries and steer toward stronger cooperation with them. Against this backdrop, this report presents suggestions on how the NSP could cooperate with the FOIP in ways that suit the interests of ASEAN and India. The policy recommendation is based on analyzing how the FOIP is received by NSP-targeted countries and the cooperation needs of this region.
   Before exploring ASEAN/India’s stance on the FOIP, Chapter 2 reviews the details of the FOIP focusing on its three pillars: security, economic and governance. By comparing the FOIP and the NSP, we explore the chance of convergence between the two policies. The results of our analysis suggest that while both policies have different objectives and approaches, particularly in the “security” pillar, there are sufficient opportunities for cooperation between the two in the fields of economic cooperation and non-traditional security.
   To clarify the position of targeted countries, Chapter 3 examines how Southeast Asia and India have responded to the U.S.’s FOIP. To counterbalance China’s growing regional power, most Southeast Asian nations welcome the active presence of the U.S. in the region, but ASEAN’s long-standing tradition to preserve its neutrality leads them to take a discreet approach to the FOIP. While most ASEAN member states are reluctant to clarify their position, they are likely to participate in FOIP-related initiatives that suit their national interests. On the security side, maritime states, particularly Vietnam, are eager to seek U.S. support for enhancing their maritime capacity to better respond to Chinese aggression in the South China Sea and other maritime challenges. However, although these countries will step up security cooperation with the U.S., where their interests lie, no Southeast Asian nations ‒ including two treaty allies and a close security partner, namely Thailand, the Philippines and Singapore ‒ are likely to align themselves with the FOIP that promotes anti-China narratives. On the economic front, in general, most ASEAN member states are expected to welcome economic initiatives under the FOIP. Desiring to diversify their trade/investment partners, even China-leaning countries such as Cambodia, Laos and Myanmar are not in a position to say no to new sources of finance and projects to develop their economies. One major drawback, though, is that ASEAN is unsure about the U.S.’s commitment to play a more active role in the regional economy, given the small scale of FOIP-related programs compared to those associated with China’s BRI project. Good governance principles advocated by the FOIP also create additional barriers for the majority of Southeast Asian countries that are unlikely to meet the high standards required by the U.S. Meanwhile, based on shared strategic interests to counter the rise of China, India has accelerated defense and economic cooperation with the U.S. although it is yet to fully commit itself to the U.S.’s FOIP. Like ASEAN countries, India does not agree with the China containment policy embedded in the FOIP, but given the escalated tension with China after the border row in 2020, it appears to be working more closely with the U.S. to counterbalance China. What is notable is that both ASEAN and India promote an inclusive vision of ndo-Pacific cooperation. By adopting the ASEAN Outlook on the Indo-Pacific (AOIP) at the 34th ASEAN Summit in 2019, ASEAN showed its determination to play a key role in making the Indo-Pacific a region of cooperation and prosperity for all. India’s vision of the Indo-Pacific also envisions a free, open and inclusive region where all players enjoy shared security and prosperity. More importantly, ASEAN attempts to alleviate tensions caused by great power rivalry in the region by calling for development-driven cooperation with particular emphasis on economic cooperation, connectivity, SDGs and non-traditional security issues. ASEAN and India’s stance at the evolving    Indo-Pacific cooperation is closely in line with the vision of Korea’s NSP, which envisages a “people-centered community of peace and prosperity.” This suggests that Korea’s collaboration with the U.S. in the region is better to be focused upon inclusive economic cooperation and people-centered non-traditional security areas.
   Taking this into account, Chapter 4 analyzes the needs of targeted countries in selected areas where synergy is expected in promoting ROK-US cooperation: digital, energy, infrastructure development and several sub-fields of non-traditional security. In addition to policy reviews of major cooperation partners – Indonesia, Malaysia, Myanmar, the Philippines, Thailand, Vietnam and India – in each sector, quantitative analysis was conducted to calculate the cooperation demand by sector in these countries, and to evaluate the competitiveness of Korea and the U.S. in supporting development in each sector of the countries. When it comes to non-traditional security issues, ASEAN’s needs are explored focusing on the areas of environmental protection, disaster relief, health and maritime cooperation.
   Drawing upon the analysis addressed in the previous chapter, Chapter 5 discusses possible directions in which ROK-US cooperation can play out in the Indo-Pacific region. Most importantly, to step up economic cooperation, a working-level commission could be established where relevant authorities of the two countries can discuss overlapping interests and identify feasible joint projects where they see synergy. As for cooperation by sector, one major high-profile area in the digital sector is ICT infrastructure development, particularly in Indonesia, Malaysia, the Philippines, Thailand and India, where demand is high. In addition, given the growing digital economy in the region, the two countries should pursue collaboration to improve digital systems and standards in ASEAN. They may regularly hold workshops for knowledge exchange and provide training programs designed to enhance the digital and cybersecurity capacity of potential partners in ASEAN. In the energy sector, one salient area for ROK-US partnership is the promotion of energy efficiency in the region. Korea and the U.S. can launch a joint energy efficiency initiative and set up a working group to initiate programs for reforming energy regulation and supporting the growth of renewable energy industries in potential partners. Pertaining to infrastructure development, Seoul and Washington have vast opportunities of cooperation in road connectivity, water system and electricity infrastructure. In particular, they can work together to enhance road connectivity in Indonesia, Malaysia, the Philippines and Vietnam and upgrade water facilities in the lower Mekong area. The two countries also need to pursue a joint initiative for improving electricity infrastructure in the region, including institutional support to woo private investment. Given the high demands for electricity facilities in Myanmar and India, a bilateral working group can be formed to address the need of these countries and provide consultation for their governments and private sector. As for the non-traditional security area, it will be better to start by exploring overlapping areas between existing programs conducted by Korea and the U.S. in ASEAN. To this end, Seoul and Washington need to create a regular dialogue channel between working-level authorities of competent agencies on both sides, for instance the Korea International Cooperation Agency (KOICA) and U.S. Agency for International Development (USAID). In the areas where their interests overlap, they can launch ROK-US cooperation funds designed to support specific projects in need. In the area of environmental protection, priority areas will be climate change adaptation in ASEAN member states and biodiversity conservation in the lower Mekong wetlands. Regarding disaster prevention and relief, they should work together to improve flood forecasting/warning systems in vulnerable countries by sharing information gained by satellite observations as well as reinforcing preventive facilities against floods and landslides. Korea and the U.S. also need to jointly support capacity-building for disaster response and management in ASEAN member states, including support for emergency rescue operations. In the health sector, the utmost priority should be given to fight against covid-19 in ASEAN member states, and in the long term the joint assistance should be extended to enhance the capacity of ASEAN countries in preventing and responding to new infectious disease outbreaks. Lastly, Korea and the U.S. should promote their partnership in maritime capacity-building of ASEAN states. Maritime cooperation not only meets the high demand of targeted countries, but also has a great potential to further upgrade ASEAN-Korea peace cooperation. In this sense, Korea needs to be more active in collaborating with the U.S to strengthen ASEAN’s capability in Search and Rescue (SAR), Humanitarian Assistance and Disaster Response (HA/DR) and law enforcement against transnational crimes at sea.
   In conclusion, Chapter 6 provides policy suggestions for Korea’s NSP in collaborating with the FOIP. First, Korea should consider targeted countries’ sensitivity to the FOIP and therefore promote cooperation with the U.S. in areas where shared interests overlap, rather than aligning the NSP with the FOIP. More importantly, the needs of targeted countries should be foregrounded when exploring the convergence between the two policies. Second, recognizing the criticism that the NSP prioritizes ASEAN over India, Korea should bolster cooperation with India. Promoting joint projects with the U.S. will provide a good opportunity to upgrade Korea’s cooperation with India. Our recommendation is to start from the areas where India’s demands are high such as smart city development, renewable energy and connectivity projects linking ASEAN and India. Last but not least, given the limitation of resources allocated to the NSP, Korea needs to narrow its focus and concentrate on where synergy is expected in navigating the convergence with the FOIP. Considering the strategic needs and competitiveness of both countries, our study suggests that digital transformation, smart city development, Mekong cooperation and non-traditional security should be prioritized in promoting the ROK-US cooperation.