e ripple effects on other industries and South Korea’s economic growth rate is expected to fall, affecting the public livelihood negatively.
Trade protectionism is the main unfavorable factor dragging down the economy. In June, the U.S. administration started imposing high tariffs on imported steel and aluminum products from the EU, Canada and Mexico, and they have filed a complaint with the World Trade Organization over the U.S.’ action. A trade war among major economies in the world and higher trade barriers will shrink global trade. South Korea, which depends heavily on exports, may face adverse effects such as job reduction and declining economic growth. That is why the government is urged to come up with a more sophisticated trade policy and a clearer vision for the future. Here again is Professor Choi.
As far as the manufacturing industry is concerned, Korea can fend off global trade protectionism only in a limited way. It’s like a competition on an uneven playing field. No matter how hard a player kicks the ball, the ball rolls down to the player after all. It is necessary to level the playing field, but that’s far from easy. Still, South Korea should make efforts. It could cooperate with other countries in a similar situation and bring up the issue with a concerted voice. In the Korean economy, it is the service industry that creates 70 percent of jobs. In reality, however, the service sector is relatively weaker than the manufacturing industry in terms of exports. There are limitations in creating jobs only in the manufacturing sector, which can offer 30 percent of jobs. The government must face up to the reality and promote exports in the service industry. If Korea manages to find major export items in the service sector, it can reduce the side effects of trade protectionism afflicting the manufacturing industry in some way in the mid-and long-term.
The upheaval in the global trade order as a result of spreading trade protectionism cannot be resolved with a stopgap measure. To overcome the difficulty, South Korea needs to join forces with other countries to cope with the situation and find a way to export its service industry.