Dr. Syama Prasad Mookerjee Research Foundation

Why South Korea is Significant for India?

South Korea’s diplomacy has always been predominantly focused on four major powers – the United States, China, Japan and Russia who are considered stakeholders in the security of the Korean peninsula. In particular, China, the US and Japan remain South Korea’s major trading partners and markets for South Korean exports. However, after facing tough trade and economic fallouts with two of its largest trading partners, China and the US, South Korea is seeking to reduce its dependence on them by looking for alternative markets. Moreover, South Korea had believed that it can successfully leverage its relationship with both the US and China for its benefits and favourable economic and security relations based on the G2 concept. However, with the intensifying strategic competition between US and China South Korea was unable to cope up and worse, was faced with unintended consequences.

For instance, on the one hand, its relations with China worsened as it faced trade retaliations over its decision to deployTheatre High Altitude Area Defence (THAAD) system in Korea. Since China remains the largest importer of South Korean goods, it affected its trade relations immensely. On the other hand, as the US resets its discourse from American decline to ‘America First’ policy, measures are taken mainly at containing further US technology transfer to China for its ‘Made in China 2025’ initiative and regaining US dominance through improving its market access. In this regard, South Korean exports are expected to decrease due to US-China trade war because it supplies many of the components to the Chinese goods that are exported to the US.South Korea also had to renegotiate its trade deal that allows for US to export automobiles to South Korea in order to be exempted from US trade tariffs regarding South Korean steel exports to the US.

Consequently, to enable South Korea to expand its strategic space as well as diversify its market presence, it aptly named its new diplomacy as ‘New Southern Policy’.

India in New Southern Policy
New Southern Policy has made India an arch of South Korea’s diplomatic endeavour.In this context, South Korea’s President Moon Jae-in’s bilateral visit to India between 8 July to 11 July 2018 came with specific purposes. Changes in South Korean perception are crucial and timely for India. First, South Korea aims to elevate its relationship with India to that of four major powers.South Korea has been resetting its diplomacy to play a more prominent role on the global stage as a “middle power”. Because of its alliance with the US, there has been discussions between the two countries over its role in the Indo-Pacific strategy. However, unlike Japan, it has not endorsed the strategy due to its perceived alliance-type containment angle against China. While acknowledging that its New Southern Policy shares some similarities with the Indo-Pacific strategy such as importance of India, and enhancing strategic cooperation with Southeast Asian countries,it is clear that it is comfortable with a balanced approach. As a result, the New Southern Policy is combined with its New Northern Policy, which is aimed at improving relations with Russia and consequently, North Korea. In fact, South Korea seeks more policy convergence with India’s Act East policy. This perception will allow both countries to expand on strategic areas of cooperation without overt containment strategies, and as partners could take measures to lessen the pressure to participate in the Indo-Pacific strategy.

Secondly, South Korea intends to improve its trade relations with India. Some apprehensions in India over favourable trade deficit towards South Korea have led India reluctant to open its market further. Although both countries had signed the Comprehensive Economic Partnership Agreement (CEPA) and achieved the target of increasing their bilateral trade to 20 billion dollars, they have been reticent to go further. Nonetheless, there are signals that the bilateral relationship could benefit from the New Southern Policy. For instance, it is imperative for India to attract Foreign Direct Investment (FDI) consistently to improve its infrastructure. Already, South Korea had agreed to investment 10 billion dollars in India’s infrastructure sectors in 2017. In the recent visit, as part of Make in India initiative, Moon opened an expanded Samsung Electronics Mobile Factory in Noida worth over 720 million dollars. In addition, both countries also signed an Early Harvest package for an upgraded CEPA including 10 other agreements in areas such as biotechnology and bio-economics, scientific and technological research, ICT and telecommunications.

South Korea’s increased focus on India also gives the opportunity for the latter to extract favourable trade deals. For example, as President Moon proposed his intention to strengthen the ‘Special Strategic Partnership’, both countries seek to improve their bilateral trade to 50 billion dollars by 2030. Given that India’s concerns has been that the trade deficit is disproportionately favouring South Korea, under its New Southern Policy, it gives India an opportunity negotiate much more market access for Indian goods and services.Already, it is visible in the newly agreed Early Harvest project. For instance, according to Vikram Doraiswami, the Indian Ambassador to South Korea, one of the agreed chapters in early harvest are ‘services’.

India’s Act East Policy and Indo-Pacific Strategy
Prime Minister Modi had revamped India’s Act East policy to create a greater synergy between India and ASEAN and East Asia. Apart from realising the economic potential of the region, it is also aimed at improving India’s strategic and security cooperation in the region, in particular with Vietnam and Japan. India has been willing to expand its strategic cooperation with the US and Japan, and wishes to cooperate on an Indo-Pacific strategy that operates on inclusivity. Prime Minister Modi espoused this view in the Shangri-La summit, where he established that ASEAN remains the central to any security cooperation, and that India supports an inclusive arrangement.

Therefore, South Korea’s New Southern Policy offers a significant avenue, which does not alienate either China or Russia or limits India’s involvement into a geo-political arrangement. Rather it gives India and South Korea an opportunity to develop a regional arrangement that focuses on issues that are central to India – scientific and technological research in fourth industrial revolution, improving India’s defence industries, and cultural and trade policies. This is reflected in both countries understanding that they would cooperate in defence and strategic areas, in particular ‘military exchanges, training and experience sharing, and research and development including innovative technologies for mutual benefit’.They also agreed to further cooperation in defence shipbuilding such as enabling Hindustan Shipyard Limited to upgrade and modernise its facilities.

India faces an uncertain global environment. The competition between the US and China has intensified. Due to its centrality to the Indian Ocean region and potential manpower and resources, India has once again become a significant actor in great power competition. While India’s growth and expanding influence has enabled it to negotiate these challenges better, it is imperative that alternate avenues are created, where India can express its views and play greater role without being drawn into rivalries. At the same time, India’s developmental needs and South Korea’s desire for regional space means that both countries can effectively combine the strategic goals of India’s Act East Policy and South Korea’s New Southern Policy.

(The author is an Associate Fellow at the East Asia Centre, Institute for Defence Studies & Analysis (IDSA), New Delhi)