[Insight & Opinion] Korean Economy Needs the Diplomatic Skills of Seo Hui

"At this rate, the Japanese economy will surpass the United States." In the early 1980s, Japan's export-driven economic status soared to the skies, and the unprecedented twin deficits experienced by the United States heightened its sense of crisis to an extreme degree. The United States' big brother role, centered on the Bretton Woods system and the Marshall Plan, had long since ended, and the luxurious concept of alliances was nowhere to be seen in the face of its own economic interests. In 1985, the U.S. summoned finance ministers from major Western countries, including Japan, to the Plaza Hotel in New York and demanded currency revaluations from each country. The primary target was, of course, Japan, and the yen was revalued the most significantly. Due to Japan's submissive attitude, the U.S. again called Japan, the largest semiconductor producer in 1986, to sign a semiconductor agreement. Under the pretext of preventing semiconductor dumping, Japanese semiconductor companies were forced to report their financial information in detail to the U.S. government?an absurd situation. Since then, Japan's economic status has plummeted for decades until recently.

The situation Japan faced in the mid-1980s is becoming the current reality for our country. After making enormous investments to build production plants in the U.S., there are semiconductor and electric vehicle regulations demanding that companies not invest in China or use Chinese raw materials to qualify for subsidies. There is even a recurring demand that companies applying for subsidies submit their financial information to the U.S. government. There was also a shocking request that if China does not purchase semiconductors from U.S. company Micron, then Samsung and SK Hynix should not sell semiconductors to China either. This is an unprecedented situation where Korea is blatantly sacrificed under the guise of alliance. During the Korea-U.S. summit, a U.S. journalist asked, "President Joe Biden, are you harming key allied Korean companies to gain domestic political support?"?a question that represented Korea and struck at the heart of the matter, leaving the Korean side speechless and evoking a sense of shame.

Other countries' checks and balances are also formidable. China's economic sanctions are intensifying, citing issues with Korea's diplomatic politics. Europe, under the pretext of environmental issues, is attempting to impose fatal trade regulations on Korea by promoting RE100, despite Korea's renewable energy share being less than 10%. Contrary to the past, Japan, now benefiting from a weak yen, is seizing the opportunity of Korea's retreat. Taking advantage of the severed inter-Korean relations, Japan is trying to engage in dialogue with resource-rich North Korea over rare earth elements and is seeking to revive its semiconductor industry through cooperation with the U.S., exploiting U.S. checks on Korea. In China, it is said that Japan's Shiseido is compensating for the decline in sales of Korean cosmetics.

There is a fearful concern that Japan's long lost years might become our reality. However, the fact that we can thoroughly learn from Japan's past mistakes offers hope. First, we must recognize that Japan suffered more severely because it passively and optimistically complied. We must strongly raise reasonable objections to the irrational demands of the U.S. At the same time, it is necessary to employ all means to ensure that U.S. public opinion turns in our favor. Unlike in the past when there was significant anti-Japanese sentiment among Americans, there is now a sympathetic public opinion toward Korea, as evidenced by the journalist's question to Biden.

It should also be noted that while the U.S. was an absolute power economically and politically in the 1980s, that is no longer the case. The U.S.-China hegemonic competition can be either a disaster or a blessing depending on how it is handled. Haven't we already studied the diplomatic skills of Seo Hui, who, having accurately grasped what the Khitan, who invaded Goryeo with a large army, truly wanted, secured the six garrisons of Gangdong without shedding a drop of blood?

Seo Junsik, Professor at Soongsil University

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