{"id":2200828,"date":"2023-04-26T19:30:20","date_gmt":"2023-04-26T10:30:20","guid":{"rendered":"https:\/\/koreapro.org\/?p=2200828"},"modified":"2023-04-27T19:25:24","modified_gmt":"2023-04-27T10:25:24","slug":"how-yoon-biden-summit-masks-south-koreas-growing-concerns-over-us-intentions","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2023\/04\/how-yoon-biden-summit-masks-south-koreas-growing-concerns-over-us-intentions\/","title":{"rendered":"How Yoon-Biden summit masks South Korea\u2019s growing concerns over US intentions"},"content":{"rendered":"

The U.S. and South Korea have announced a series of significant investments across various sectors in recent days, and these agreements, timed with ROK President Yoon Suk-yeol\u2019s state visit to Washington, have underscored efforts to bolster economic ties at the same time as the allies seek to reinforce their security relationship.<\/span><\/p>\n

Notably, the deals will see South Korea\u2019s presence in the U.S. electric vehicle (EV) battery market continue to grow.<\/span><\/p>\n

But the flurry of announcements has also served to paper over major challenges in the countries\u2019 economic ties, as Washington\u2019s push to contain China has impacted ROK firms as well. And the resultant feelings of discontent now simmering in South Korea risk causing more problems for the alliance down the road.<\/span><\/p>\n

DEEPENING ECONOMIC TIES<\/b><\/p>\n

During the state visit, a consortium of American high-tech firms unveiled <\/span>plans to invest<\/span><\/a> a combined $1.9 billion in South Korea, targeting areas such as clean hydrogen fuel, semiconductors and environment-friendly facilities. One planned joint project \u2014 <\/span>small modular reactors (SMRs)<\/span><\/a> \u2014 has the potential to revolutionize the energy industry and contribute to decarbonization efforts.<\/span><\/p>\n

These investments aim to strengthen supply chain collaboration and facilitate eco-friendly energy transitions.<\/span><\/p>\n

Further, Netflix\u2019s pledge to <\/span>invest<\/span><\/a> $2.5 billion in Korean content over the next four years following a meeting between Yoon and its co-CEO Ted Sarandos will provide a significant boost to the Korean entertainment industry.<\/span><\/p>\n

South Korean businesses have also pledged to invest in the U.S. market. In response to the U.S. Inflation Reduction Act (IRA), companies like SK On and Hyundai Motor and their affiliates plan to invest <\/span>$5 billion<\/span><\/a> in an electric vehicle (EV) battery plant in Georgia. Additionally, Samsung SDI and General Motors are collaborating on a <\/span>$3 billion<\/span><\/a> battery plant in the U.S.<\/span><\/p>\n

These substantial investments demonstrate South Korea\u2019s dedication to the EV battery market and its strategic positioning within the U.S. supply chain.<\/span><\/p>\n

\"\"

President Yoon Suk-yeol attends the US-ROK business roundtable meeting in Washington, DC | Image: ROK Presidential Office<\/a><\/em><\/p><\/div>\n

SOUTH KOREAN FEARS<\/b><\/p>\n

Despite these encouraging signs, the numerous memorandums of understanding (MOUs) that South Korean and American businesses have signed recently mask Seoul\u2019s deep-seated concerns about Washington\u2019s intentions and fears of competitive disadvantage.<\/span><\/p>\n

In Sept. 2022, the ROK <\/span>banned<\/span><\/a> L&F Company, a domestic battery materials producer, from building a new plant in the U.S. L&F planned to shift some of its production in response to the IRA, which favors electric vehicles using materials processed in the U.S.<\/span><\/p>\n

The energy ministry cited the possibility of key technology leaks that could damage Korea\u2019s national security when issuing the ban. The <\/span>Prevention of Divulgence and Protection of Industrial Technology Act<\/span><\/a> designates dozens of technologies as national core technologies, including <\/span>battery-related innovations<\/span><\/a> such as mid- to large-sized lithium secondary batteries for electric vehicles and high-nickel anode materials.<\/span><\/p>\n

Even so, the South Korean government cannot simply erect its own economic barriers, as doing so will inflict long-term damage to ROK businesses as they lose out to their Chinese competitors.<\/span><\/p>\n

The IRA only provides subsidies and tax credits for batteries that do not depend on \u201cforeign entities of concern\u201d for their minerals and components. The initial assumption was thus that the IRA would also force U.S. firms to cut out Chinese manufacturers in favor of South Korean companies.<\/span><\/p>\n

However, Ford Motor Company\u2019s <\/span>decision<\/span><\/a> to license lithium iron phosphate (LFP) technology from China\u2019s Contemporary Amperex Technology Company Limited (CATL) presents a formidable threat to South Korean battery makers. Ford\u2019s EVs will still be eligible for IRA tax breaks because CATL\u2019s batteries are manufactured in <\/span>Michigan<\/span><\/a>.<\/span><\/p>\n

The Ford-CATL agreement represents a particularly detrimental development for South Korean manufacturers, and it is largely due to Washington\u2019s failure to narrowly define the IRA\u2019s \u201cforeign entities of concern\u201d clause.<\/span><\/p>\n

Consequently, South Korean companies may not opt to keep their production facilities within the ROK due to concerns about losing market share if they maintain their operations domestically.<\/span><\/p>\n

GROWING RESENTMENT<\/b><\/p>\n

Before Yoon Suk-yeol traveled to the U.S. for his summit with President Joe Biden, the White House <\/span>requested<\/span><\/a> that South Korea encourage its chipmakers, Samsung Electronics and SK Hynix, not to fill any market gap in China if Beijing bans U.S.-based Micron Technology from selling chips.<\/span><\/p>\n

Beijing launched a cybersecurity review of imports from Micron, America\u2019s largest memory chip-maker, <\/span>citing<\/span><\/a> its need to \u201censure the integrity of its information infrastructure supply chain, prevent network security risks and maintain national security.\u201d\u00a0<\/span><\/p>\n

The White House\u2019s request is a sore subject, as it marks the first known instance where Washington sought an ally\u2019s assistance in enlisting its companies to counter China. Further, South Korean businesses have already <\/span>suffered significant losses<\/span><\/a> partly as a result of the U.S. CHIPS and Science Act.<\/span><\/p>\n

The U.S. <\/span>bars<\/span><\/a> recipients of $53 billion in CHIPS Act subsidies from engaging in \u201ccertain significant transactions\u201d involving expanding chip manufacturing capacity in China, or \u201ccountries of concern,\u201d for 10 years.<\/span><\/p>\n

South Korea\u2019s main opposition Democratic Party leader Lee Jae-myung <\/span>implied<\/span><\/a> in a statement that the U.S. is treating South Korea as if it were a vassal state, making unreasonable demands and behaving disrespectfully. \u201cOur country does not have the authority to ask our businesses what to export or not,\u201d Lee added.<\/span><\/p>\n

\u201cOur national interests, as well as the lives and livelihoods of our people, must always come before any alliance. It is essential to safeguard our semiconductors, the backbone of our economy, from discriminatory practices.\u201d<\/span><\/p>\n

Yoon Suk-yeol\u2019s approval rates have fallen in the past few months, and a leading cause for that has been voters\u2019 disapproval of his foreign policy. His approval rating dipped to <\/span>27%<\/span><\/a> before slightly rebounding to <\/span>31%<\/span><\/a> shortly before his departure to Washington. Yoon\u2019s friendly approach toward Japan and the U.S. has also been described as <\/span>humiliating<\/span><\/a> and <\/span>submissive<\/span><\/a>.\u00a0<\/span><\/p>\n

The MOUs being announced this week, for all the benefits they aim to create, risk fostering resentment in the long run if alliance managers don\u2019t deftly handle the percolating discontent about how U.S. policies have impacted South Korea.<\/span><\/p>\n

Edited by Bryan Betts<\/span><\/i><\/p>\n

Business & Economy<\/span><\/a>Domestic Politics<\/span><\/a>Inter-Korean & Foreign Relations<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"

The U.S. and South Korea have announced a series of significant investments across various sectors in recent days, and these agreements, timed with ROK President Yoon Suk-yeol\u2019s state visit to Washington, have underscored efforts to bolster economic ties at the same time as the allies seek to reinforce their security relationship. Notably, the deals will […]<\/p>\n","protected":false},"author":10407,"featured_media":2200829,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21],"tags":[24,27,28],"class_list":["post-2200828","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","tag-business-economy","tag-domestic-politics","tag-inter-korean-foreign-relations"],"yoast_head":"\nHow Yoon-Biden summit masks South Korea\u2019s growing concerns over US intentions - KOREA PRO<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/koreapro.org\/2023\/04\/how-yoon-biden-summit-masks-south-koreas-growing-concerns-over-us-intentions\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Yoon-Biden summit masks South Korea\u2019s growing concerns over US intentions - KOREA PRO\" \/>\n<meta property=\"og:description\" content=\"The U.S. and South Korea have announced a series of significant investments across various sectors in recent days, and these agreements, timed with ROK President Yoon Suk-yeol\u2019s state visit to Washington, have underscored efforts to bolster economic ties at the same time as the allies seek to reinforce their security relationship. 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