On November 8 EST and November 9 KST, U.S. and Korean business leaders of the U.S.-Korea Business Council and the Korea-U.S. Business Council (the “Councils”) convened at the thirty-third Annual Joint Plenary Meeting. The meeting was held in a hybrid format, with American companies joining virtually from Washington D.C. and the region, while Korean companies joined in person from the Federation of Korean Industries in Seoul, Korea.
The Joint Plenary centered around the priority areas for U.S.-Korea cooperation announced during the Moon-Biden summit last May, including close collaboration on pandemic response, expanded cooperation to secure supply chains in critical industries and emerging technologies, and a shared commitment to combat climate change. The Councils also discussed ways to strengthen the bilateral relationship and improve the business environment in the U.S. and Korean market to accelerate the post-pandemic recovery. The Councils reaffirmed their commitment to work to advance the two governments’ goals and expressed their readiness to collaborate with the governments to implement the following recommendations.
1. Strengthen the U.S.-Korea economic relationship to accelerate Post-Covid-19 recovery
The pandemic has highlighted the need for greater collaboration between the government and the private sector and our organizations stand ready to engage and work with both governments for economic recovery and revitalization. The U.S. and Korean private sectors recognize that they will play an increasingly important role to build a stronger and more resilient economy, as public demand will rise for them to create good jobs, seamlessly deliver quality goods and services, and drive digital and green transformation for sustainable economic growth. Against this backdrop, continued U.S.-Korea trade and investment will be critical. We therefore urge the governments to:
- Remove trade-restrictive measures that are contrary to the letter and spirit U.S.-Korea Free Trade Agreement (KORUS) such as the use of imports restrictions based on Section 232 of the U.S. Trade Expansion Act, as well as the Korean government’s restrictions on cloud services and regulation of pharmaceuticals and medical devices;
- Address key factors that inhibit innovation and investment, such as burdensome administrative procedures, rigid labor rules, and duplicative rules and regulations, e.g., Korea’s Severe Accident Punishment Act (SAPA) that is at odds with global norms;
- Create a business environment that duly recognizes the risk and rewards of investment in innovative industries such as the biopharmaceutical industry; and
- Ensure regular public-private dialogue and appropriate time for industry to provide comments for business-related policies during the planning, formulation, and implementation phases of the policies.
2. Build a resilient and trusted supply chain in critical sectors
While global merchandise trade is at record levels according to some measures, supply chains are facing serious difficulties as demand for key goods such as semiconductors outstrips supply. Also, congested ports and ongoing Covid-19 shutdowns in key manufacturing regions add to the strains. As the U.S. and Korea work with like-minded countries to enhance our collective supply chain resiliency, especially in key strategic areas such as semiconductors, electric-vehicle batteries, and pharmaceuticals, the Councils encourage the two governments to:
- Enhance public-private dialogue to identify bottlenecks and constraints on the sourcing, production, and distribution of critical technologies and supplies;
- Provide business incentives that diversify the supply chain and foster investment and R&D providing flexibility for companies in like-minded countries; and
- Promote coordination among allies and refrain from requesting sensitive business confidential trade information from like-minded countries.
3. Promote regulatory cooperation in the digital economy and strengthen partnership on critical and emerging technologies
The pandemic has revealed the benefits of digitalization, but also highlighted areas where there is yet more potential such as in digital health. The Councils welcome the U.S. and Korean governments’ discussions to coordinate rules for digital trade amid the global proliferation of protectionist digital trade barriers. We urge the governments and stand ready to work with them to:
- Establish a global, regional, or bilateral regulatory framework on digital trade that bars customs duties on electronic transmissions among other objectives;
- Deepen the government-industry discussions with regard to data governance to better understand the needs of a data-driven economy; and
- Strengthen cooperation for promoting 5G vendors and ICT services such as cloud computing and network infrastructure, and support a competitive, open, and non-discriminatory market.
4. Achieve carbon neutrality and enhance environmental sustainability
The Councils appreciate the U.S. and Korean governments’ commitment to demonstrate global leadership on the path to achieving a carbon neutral future, and welcome their expanding cooperation across all energy sectors from oil and gas to solar, hydrogen, nuclear energy, and electric vehicle batteries. The Councils are determined to work with the U.S. and Korean government to facilitate business investment in innovative technologies and to promote a smooth energy transition. To that end, we encourage the governments to:
- Set climate goals and policies through an open and consultative process with industry, to ensure that they are achievable, sustainable and do not harm U.S. and Korea’s long-term economic growth, energy security, and global competitiveness;
- Utilize market-based mechanisms when introducing incentives and regulations, so that they are consistent with free enterprise and free trade principles and do not impede competition or discriminate between domestic and foreign investors; and
- Recognize the unique and important role of natural gas and nuclear energy in tandem with renewable energy to achieve a lower carbon future as the primary driver of emissions reductions.
As investors, employers, and business leaders operating in both countries, the Councils welcome the opportunity to provide our comments. We believe that acting on these recommendations will foster innovation and sustainable economic growth in both the United States and Korea and allow for continued commercial collaboration between our economies.
The Councils agree to hold the 34th USKBC-KUSBC Joint Plenary Meeting in the Fall of 2022 in Seoul.
