This Year's External Economic Policy Tasks Focus on Digital Trade and CPTPP Response... Heading Toward New Southern Policy

KIEP Survey of 117 Experts
Government Announces '2021 Foreign Economic Policy Implementation Strategy'

[Sejong=Asia Economy reporters Kim Hyunjung and Joo Sangdon] Experts identified the government's top priority for external economic policy this year as responding to changes in the multilateral order, including strengthening digital trade and environmental standards and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The government plans to accelerate domestic institutional improvements for CPTPP accession while strengthening sectoral cooperation with strategic economic cooperation countries (tentative name) to develop customized market entry strategies within the first half of the year.

According to a survey conducted on the 11th by the Korea Institute for International Economic Policy of 117 external economic experts by sector and region, the experts pointed to "responding to strengthened digital trade and environmental standards (32%)" and "responding to changes in the multilateral order such as CPTPP (21%)" as the external economic policies the government should focus on this year. This was followed by ▲support for overseas expansion of companies (exports, orders·15%) ▲stable management of the foreign exchange market (11%) ▲deepening bilateral economic cooperation with major countries (10%) ▲strengthening international cooperation such as G20 (7%).

Regarding the most important task to support Korean companies' overseas expansion, one in four experts (25%) pointed to strengthening government-to-government cooperation platforms. This was followed by ▲support for discovering new businesses (21%) ▲expanding information provision and consulting (17%) ▲expanding financial support (13%) ▲establishing overseas bases such as industrial complexes (9%) ▲expanding FTAs (8%) ▲strengthening public institution capabilities (5%). As for countries with which the government should expand cooperation in the future, half of the respondents (50%) chose the New Southern region. Regarding areas for strengthening cooperation by country, respondents said business orders such as infrastructure (37%), global value chains (GVC·35%), and advanced technology (9%) were necessary. Cooperation with the United States was requested in advanced technology (44%), GVC (20%), and healthcare (12%), while cooperation with the New Northern region was requested in business orders (35%), energy (35%), and advanced technology (15%).

On the same day, the government announced the "2021 External Economic Policy Implementation Strategy" and stated that it is actively considering participation in the CPTPP to conclude high-level free trade agreements (FTAs). To this end, it plans to prepare domestic institutional improvement measures in four major areas?sanitary and quarantine, fisheries subsidies, digital trade, and state-owned enterprises?that meet CPTPP standards by the first half of this year. Procedures related to the Regional Comprehensive Economic Partnership (RCEP), the world's largest FTA concluded last year, will also be completed in the first half of the year, with preparations for parliamentary ratification procedures in the second half.

To open new paths for overseas expansion, a new economic cooperation model will be established within the first half of this year based on two pillars: "promising target countries" and "core sectors." Considering domestic companies' expansion demands, strategic economic cooperation countries will be selected for focused policy support, and cooperation in four core sectors?infrastructure, urban development, eco-friendly energy, and healthcare?will be increased. New economic cooperation measures beyond current policy finance and official development assistance (ODA) will also be introduced to strengthen the strategic investment functions of policy financial institutions.

Furthermore, the government will promote economic cooperation with the U.S. Biden administration in areas such as climate change response, health and quarantine, and New Deal cooperation, while expanding the approval scale of the Green and Digital External Economic Cooperation Fund (EDCF) by $300 million compared to last year. While actively pursuing FTAs with emerging countries such as the New Southern and New Northern regions, the overseas order target for this year is set to exceed $30 billion for the second consecutive year, following last year's $35.13 billion.

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