Martial Arts: "IPEF Should Be Utilized as a Means to Secure Supply Chains and Trade Investment Offices"

The Possibility of a US-China Divide Scenario Is Low

[Asia Economy Reporter Park Sun-mi] As the United States' Indo-Pacific Economic Framework (IPEF) is expected to officially launch coinciding with President Biden's visits to Korea and Japan, there is a claim that Korea should utilize IPEF as a practical response tool to enhance supply chain resilience and secure stable trade and overseas investment destinations.

According to the "U.S. Indo-Pacific Strategy and Implications: Focusing on IPEF, Trade, and Investment" report released on the 17th by the Korea International Trade Association's International Trade and Commerce Research Institute, the Indo-Pacific region accounted for 35.2% of the world's population, 44.8% of gross domestic product (GDP), and 35.3% of merchandise trade as of 2020. It is an important market that accounts for nearly half, 47.1% (based on 2021), of Korea's exports.

The U.S. strategy toward the Indo-Pacific region began with the Obama administration's "Asia-Pacific" strategy, expanded to the "Indo-Pacific" strategy under the Trump administration, and has been consistently pursued through the Biden administration.

The Indo-Pacific region is especially critical from the perspective of U.S. supply chain security. For semiconductors, designated as a strategic item by the U.S., a cooperative system is already in place. The U.S. handles the front-end processes, Korea is responsible for memory semiconductor design and production, Taiwan manages system semiconductor design and production, Japan provides manufacturing equipment, and Malaysia handles back-end processes. Additionally, ASEAN and India are actively engaged in processing and production in the electronics and electrical manufacturing industries.

However, in advancing IPEF, the expansion of participating countries and domestic reactions ahead of the U.S. midterm elections could be variables. While participation from Korea, Japan, Australia, New Zealand, and Singapore is certain, it is pointed out that ASEAN and India's involvement is necessary for IPEF to hold the strategic value the U.S. expects.

There are criticisms of IPEF mainly from Republican lawmakers, with claims that momentum may decline depending on the results of the November congressional elections. In response, the report stated, "Republican administrations do not deny the strategic importance of the Indo-Pacific region, and it should also be considered that IPEF is an administrative agreement that does not require congressional approval like a trade agreement."

Park Sun-min, a research fellow at the Korea International Trade Association, advised, "Attention should be paid to the fact that the recent U.S. approach to China is cautious and that the U.S. has stated it is not forcing a choice between the U.S. and China," adding, "Given the recent emphasis on the importance of stable and resilient inter-country cooperative systems amid supply chain and logistics crises, IPEF should be utilized as a tool to maximize practical benefits for companies and the nation."

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