{"id":2202562,"date":"2023-10-25T17:00:22","date_gmt":"2023-10-25T08:00:22","guid":{"rendered":"https:\/\/koreapro.org\/?p=2202562"},"modified":"2023-10-26T17:02:11","modified_gmt":"2023-10-26T08:02:11","slug":"south-koreas-entry-in-global-digital-economy-pact-signals-ambitious-goals","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2023\/10\/south-koreas-entry-in-global-digital-economy-pact-signals-ambitious-goals\/","title":{"rendered":"South Korea\u2019s entry in global digital economy pact signals ambitious goals"},"content":{"rendered":"

In June 2023, South Korea affirmed its digital strategy by becoming <\/span>the first non-founding member<\/span><\/a> to join the Digital Economy Partnership Agreement (<\/span>DEPA<\/span><\/a>).<\/span><\/p>\n

The ROK\u2019s participation in DEPA, initiated by New Zealand, Chile and Singapore in 2020, goes beyond expanding its portfolio of global trade agreements. It represents the country\u2019s commitment to actively participate in shaping the regulatory framework of the increasingly digital global economy.<\/span><\/p>\n

Having been involved in numerous World Trade Organization <\/span>discussions and agreements<\/span><\/a> concerning digital trade, South Korea is well-acquainted with the complexities of the digital economy.<\/span><\/p>\n

Through its DEPA membership, South Korea is positioning itself as a key player with the potential to influence the standards and policies governing digital trade. This move isn\u2019t solely about leadership on the global stage. It also highlights South Korea\u2019s acknowledgment of the growing commercial interests in digital trade regulation.<\/span><\/p>\n

The move is anticipated to benefit a broad range of sectors, from large tech companies and e-commerce platforms to small and medium-sized enterprises (SMEs), demonstrating the country\u2019s holistic approach to the digital economy.<\/span><\/p>\n

Thus, South Korea\u2019s decision to join DEPA signals its determination to ensure its businesses are not just bystanders but influential actors in the global digital economy. It marks a calculated move toward a future where South Korean businesses, cultural exports and tech innovations form a significant part of the international digital landscape.<\/span><\/p>\n

EXPANDING DIGITAL FRONTIERS<\/b><\/p>\n

South Korea, with its extensive network of <\/span>21 active free trade agreements<\/span><\/a> (FTAs) covering 59 countries, is no novice in the arena of international trade. The country is in the midst of negotiating 12 more FTAs, though some, like the anticipated <\/span>trilateral deal<\/span><\/a> involving South Korea, China and Japan, might take longer to come to fruition. Another recent agreement with the <\/span>Philippines<\/span><\/a> is pending ratification, highlighting South Korea\u2019s continuous efforts to expand its trade horizons.<\/span><\/p>\n

The necessity for South Korea to engage in a digital-focused trade agreement like DEPA becomes evident when considering the evolving landscape of global commerce. Most of the nation\u2019s extensive array of existing FTAs center on traditional trade in goods, with minimal attention to the burgeoning digital economy. Digital trade elements, if present in agreements such as the one with <\/span>Singapore<\/span><\/a> from 2005, are often broad and lack the depth required to address the nuanced complexities of today’s digital transactions.<\/span><\/p>\n

The <\/span>U.S.-Korea Free Trade Agreement<\/span><\/a> is distinctive, containing specific provisions concerning the free flow of data, setting a precedent for future digital trade regulations. However, internationally, the framework for digital trade is still unclear and underdeveloped. Efforts such as the World Trade Organization\u2019s (WTO) discussions on e-commerce encounter challenges due to <\/span>opposition from developing nations<\/span><\/a>, a lack of clear leadership and the increasing intricacy of policy issues.<\/span><\/p>\n

South Korea\u2019s participation in DEPA indicates an intention beyond addressing regulatory voids; it signifies a strategic move in the international arena. The country is utilizing its extensive background in FTA negotiations and WTO dealings, coupled with its prominence as a key <\/span>IT products exporter<\/span><\/a>, to establish a significant role in shaping regional digital trade norms \u2014 a role reminiscent of the EU\u2019s \u201c<\/span>normative power<\/span><\/a>\u201d approach.<\/span><\/p>\n

This involvement is a long-term strategy aimed at not only enhancing current trade conditions but also at influencing the trajectory of the digital economy and South Korea\u2019s standing within it.<\/span><\/p>\n

\"\"

An illustration of a port overlaid with digital data | Image: Korea Pro<\/em><\/p><\/div>\n

NAVIGATING NEW CHALLENGES<\/b><\/p>\n

The advent of new elements in the trade landscape, such as digital products, digital payments, cybersecurity and data transfer, has profoundly altered the mechanics of international commerce. With the surge in data generation, there\u2019s an escalating need for comprehensive regulation.<\/span><\/p>\n

So far, <\/span>individual countries<\/span><\/a> have attempted to address these challenges on their own, leading to a patchwork of regulatory systems worldwide. This fragmentation represents not just a hurdle but also a financial strain on businesses navigating these fragmented regulations.<\/span><\/p>\n

South Korea\u2019s decision to join DEPA signifies its commitment to streamlining these regulations. Similar to traditional trade dynamics, reducing and harmonizing trade barriers can significantly decrease operational costs for businesses while also cutting through bureaucratic red tape.<\/span><\/p>\n

Moreover, the shift toward digital trade, while presenting new avenues for growth, also amplifies the risks associated with cybersecurity. In 2022 alone, South Korea confronted significant economic setbacks, with financial losses surpassing <\/span>$700 million<\/span><\/a> due to North Korean cyber incursions, specifically targeting cryptocurrency holdings.<\/span><\/p>\n

However, this sum does not encompass the full spectrum of cyber assaults on diverse businesses, potentially pushing the total damages even higher. These circumstances highlight the urgent need for reinforced cybersecurity measures. In today\u2019s interlinked global landscape, attempting to counter cyber threats on a solitary front is impractical.\u00a0<\/span><\/p>\n

This reality accentuates the critical role of comprehensive agreements like DEPA, which facilitate a <\/span>concerted approach to cybersecurity<\/span><\/a>, allowing member nations to collectively address and mitigate pervasive cyber threats.<\/span><\/p>\n

Considering the positive economic impacts stemming from South Korea\u2019s portfolio of existing FTAs, it follows that similar comprehensive benefits could emerge from digital trade agreements like DEPA. Such agreements have the potential to catalyze a significant increase in exports across various sectors, encompassing goods and services.<\/span><\/p>\n

CHALLENGES AND OPPORTUNITIES\u00a0<\/b><\/p>\n

South Korea confronts multiple challenges that highlight the need for a pivot toward agreements focused on digital trade.<\/span><\/p>\n

As South Korea\u2019s economy matures, a shift toward a service-oriented structure, especially in digital services, becomes increasingly critical. Capitalizing on the export capabilities of the service sector is essential for the nation\u2019s preparedness for future economic dynamics.<\/span><\/p>\n

The significant income derived from exporting content \u2014 spanning various media, software and games \u2014 highlights the importance of this sector. However, there\u2019s a notable inadequacy in current FTAs to accommodate the specific needs and opportunities of service trade, indicating a necessary area of focus for South Korea\u2019s economic progression.<\/span><\/p>\n

Moreover, productivity in South Korea\u2019s service sector lags, currently at just <\/span>half<\/span><\/a> of that in the industrial sector. Exposure to more competitive international markets could spur productivity in export-driven service industries, unlocking further growth for the sector and the national economy at large. This enhanced productivity would result in increased national income, to the benefit of both citizens and businesses.<\/span><\/p>\n

Unlike many FTAs, DEPA is <\/span>non-binding<\/span><\/a>, positioning it as a potential testing ground for new forms of trade agreements that are more suited to the complexities of the digital age. This innovative approach offers flexibility, allowing for adaptations and improvements in response to the evolving digital landscape.<\/span><\/p>\n

While it’s premature to predict the specific impacts DEPA will have on traditional FTAs, it represents a forward-thinking approach to international trade policies. South Korea\u2019s strategy in this regard could provide valuable insights for other nations adapting to the digital era, making it a significant point of interest for observers of global economic policies.<\/span><\/p>\n

Edited by John Lee<\/span><\/i><\/p>\n

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

In June 2023, South Korea affirmed its digital strategy by becoming the first non-founding member to join the Digital Economy Partnership Agreement (DEPA). The ROK\u2019s participation in DEPA, initiated by New Zealand, Chile and Singapore in 2020, goes beyond expanding its portfolio of global trade agreements. 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