Illustration: Chen Xia/GT
Data compiled by the Korea International Trade association showed that South Korea’s exports to the ASEAN region totaled $47.88 billion in the first five months of this year, up 4.3 percent year-on-year, the Yonhap News Agency reported on Sunday. Over the same period, South Korea’s exports to the US went down 4.3 percent.
As an economy highly dependent on exports, South Korea has experienced considerable strain from the US tariff policies in recent months. However, it is under such external pressure that the country’s export growth in the Southeast Asian market may represent an endeavor toward trade diversification. This trend may foster deeper regional integration and collaboration, ultimately holding significant importance for expanding Asian markets and seeking new growth opportunities amid various headwinds.
In recent years, Southeast Asian countries have witnessed sustained economic growth, an expanding middle class, and an increasingly vibrant consumer market. Countries like Vietnam, Indonesia, and Thailand have shown growing demand for South Korean intermediate goods including semiconductors, electronic components, and machinery. The implementation of regional free trade agreements like the Regional Comprehensive Economic Partnership (RCEP) has further facilitated regional trade, collectively forming a solid foundation for South Korea’s export diversification.
In February, South Korea’s trade ministry unveiled the Cross-Departmental Export Expansion Strategy, outlining $254.3 billion in trade financing, tariff countermeasures and market diversification initiatives to shield exporters from escalating global trade risks. The US, ASEAN, and China were identified as primary markets.
As an integral part of global trade, the Asian industrial chain is closely intertwined with the global trading system. The uncertainties triggered by US trade measures continue to ripple through Asian supply chains in the form of raw material price fluctuations, increasing trade barriers, and volatile market demand – all posing challenges to the stable operation of regional production networks.
Against this backdrop, the urgency of expanding the Asian market is on the rise. Especially with the long-term adjustment of US trade policies, expanding the Asian market through free trade agreements has become a core path to ensure the sustainable growth of the region. The implementation of this path requires not only breaking hidden barriers to regional trade but also tapping into new market growth spaces.
Although Asia has already established a multilateral cooperation foundation such as the RCEP, there is still room for improvement in areas like tariff coordination and unification of standards.
In this regard, Asian countries, particularly those in East Asia, need to strengthen policy coordination. Asia boasts the world’s most complete manufacturing system, with strong industrial complementarity among countries. Further reducing regional tariff barriers could unleash a huge trade-creation effect.
Meanwhile, market expansion requires breakthroughs in unleashing demand. The rapidly emerging middle class in Southeast Asia is giving rise to diversified demand, ranging from electronic products to green energy. East Asian countries can enhance trade cooperation with Southeast Asian nations, introducing their high-quality products and services to the Southeast Asian market to meet local consumer needs.
At the same time, they can learn from the development experiences of Southeast Asian countries in specific fields to explore new market areas. For instance, Southeast Asian countries have unique advantages in sectors like tourism and agriculture. East Asian countries can strengthen cooperation with them to jointly develop tourism products and promote agricultural trade, achieving mutual benefits and win-win results.
In conclusion, in the face of the long-term challenges posed by US tariff policies, the joint efforts of East Asian countries to expand the market are not only necessary for addressing current challenges but also crucial for achieving sustainable regional economic development. By working together, Asian economies can navigate through the turbulent global trade environment and forge a brighter future.