<대외硏> "Biden Demands South Korea's Participation in US-Centered GVC"

Joe Biden, Democratic Party candidate for the U.S. presidential election. (Photo by AP)

[Asia Economy Reporter Moon Chaeseok] It is anticipated that if Joe Biden, the Democratic Party's presidential candidate, is elected as the U.S. president, he will request the participation of allies such as South Korea in the reorganization of the U.S.-centered Global Value Chain (GVC). While pressure on China is expected to continue, it is also predicted that multilateralism through the World Trade Organization (WTO) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will be utilized.

On the 6th, the Korea Institute for International Economic Policy (KIEP) analyzed the expected economic policies of the Biden administration and South Korea's response strategies in a report titled "Economic Policy Outlook and Implications of the Biden Administration."

KIEP stated, "The Biden administration is expected to maintain a free-trade-oriented trade policy stance and approach trade issues through a multilateral system centered on the WTO," but also noted, "In terms of trade policy toward China and the establishment of a U.S.-centered supply chain, a protectionist strategy will be pursued in parallel."

Specifically, it is expected that the U.S. will push for WTO system reforms centered on itself. Moves to change the international trade environment order led by the U.S., such as issues related to subsidies for state-owned enterprises and digital trade, are anticipated. KIEP also predicted a high possibility of the U.S. rejoining the CPTPP.

The U.S. led the Trans-Pacific Partnership (TPP) during former President Barack Obama's administration but declared withdrawal shortly after President Donald Trump took office. KIEP expects that rejoining the CPTPP will expand U.S. influence in the Asia-Pacific region.

The trade war with China is expected to be conducted more through multilateral diplomatic trade pressure by increasing influence in the WTO and CPTPP rather than direct tariff imposition. The GVC reorganization will also be centered on the U.S., with demands for participation from allies including South Korea.

Accordingly, it is pointed out that the South Korean government should establish its positions on specific issues and engage in negotiations, considering the growing U.S. influence on multilateral diplomatic stages such as the WTO and CPTPP.

Advice was also given that ways to participate in the U.S.-centered supply chain reorganization in key sectors such as automobiles, semiconductors, and medical equipment should be explored.

Regarding domestic economic policy, KIEP forecasted expansive fiscal policies such as additional economic stimulus measures and expanded benefits for companies returning to the U.S.

The Biden administration is expected to implement tax reforms centered on raising corporate taxes and increasing taxes on the wealthy, pursuing an expansionary fiscal policy based on increased revenue.

It was also analyzed that incentives for companies returning to their home country will be expanded, and punitive taxation methods will be actively used against companies moving overseas.

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