Industrial Research Institute "Whether Trump or Biden, Strengthening China Containment"

"Possibility of WTO Withdrawal if Trump is Reelected"
"TPP Reentry Possible if Biden Wins"
"K-Trade Must Reduce Dependence on China Trade"

[Asia Economy Reporter Moon Chaeseok] The Korea Institute for Industrial Economics and Trade (KIET), a government-funded research institute, announced on the 28th that regardless of who wins the U.S. presidential election in November, U.S. efforts to check China are expected to intensify. If President Donald Trump wins re-election, there is a possibility of withdrawing from the World Trade Organization (WTO), while if Democratic candidate Joe Biden wins, he may push for rejoining the Trans-Pacific Partnership (TPP).

In the July issue of its monthly publication 'Monthly Industrial Economy,' released on the 27th, KIET discussed the outlook for the 2020 U.S. presidential election, changes in trade policies under different scenarios, and corresponding countermeasures.

As of the end of this month, the likelihood of Joe Biden winning is higher than that of President Donald Trump, but since the previous election results were unexpected, it emphasized the need to prepare for all possibilities.

It assumed that regardless of which candidate wins, U.S. efforts to check China will strengthen. Fundamentally, it stressed that South Korea needs to reduce its dependence on China in trade and the global value chain (GVC) and diversify its trade relations.

Considering factors such as the COVID-19 pandemic and the U.S. protests against racial discrimination, KIET judged that Biden’s chances of winning are greater than Hillary Clinton’s four years ago.

It also diagnosed that if the Trump administration handles COVID-19 and economic issues well in the future, there remains a possibility of a turnaround.

KIET predicted that if President Trump wins re-election, the U.S. trade policy stance will not change significantly.

It expects the strengthening of protectionism through enhanced application of trade remedy measures, Section 301, and Section 232 of the Trade Expansion Act, and the possibility of pursuing withdrawal from the WTO to exclude its interference.

However, it anticipated that the U.S. would not heavily interfere in trade relations between other countries while implementing isolationist protectionism, implying there is room to strengthen trade cooperation with other countries.

If Biden wins, he is expected to use China containment as part of his diplomatic policy. There is also a possibility of pushing for rejoining the TPP, as he has advocated free trade since his vice presidency and played a leading role in promoting the TPP during the Obama administration.

However, according to his recently announced economic reconstruction plan, he also emphasized the use of U.S.-made raw materials and components and the domestic rebuilding of supply chains.

Moon Jongcheol, a research fellow at KIET, said, "If Biden wins and the U.S. uses trade policy as a means to strengthen alliances for China containment, South Korea may face a situation where it has to choose between the U.S. and China," adding, "Issues such as environment and labor may emerge as new trade issues."

KIET emphasized that South Korea should fundamentally reduce its trade dependence on China and pursue diversification of trade relations in preparation for the U.S.’s strengthened China containment.

Research fellow Moon advised, "If President Trump is re-elected, it is necessary to seek breakthroughs for the ongoing deterioration of the trade environment with the U.S. and the reduction of trade volume through diversification of trade relations."

He added, "If Biden wins, the reduction in trade volume due to decreased dependence on China should also be compensated through diversification of trade relations," and "As demands related to environmental and labor issues are expected to strengthen, it is necessary to re-examine the impact of related issues on past trade environments and prepare countermeasures."

This content was produced with the assistance of AI translation services.