The New Southern Policy (NSP) aims to elevate Korea’s strategic ties with the Association of Southeast Asian Nations (ASEAN), including its member states, and with India, in the process cooperating with Korea’s four major diplomatic partners: The United States, China, Japan, and Russia. It is a novel attempt to put ASEAN member states (AMS) and India at the center of Korea’s foreign policy agenda. The NSP was first announced in November 2017 in Indonesia by President Moon, proclaiming a vision of a “people-centered community of peace and prosperity” with three communities centered on people, prosperity, and peace. The Presidential Committee on New Southern Policy, which was established in August 2018, announced promotion strategies in November 2018 after its 1st plenary meeting. At the 2nd plenary meeting in April 2019, 50 key projects under 16 initiatives were determined. To date, a total of 57 key projects have been implemented following the addition of seven projects.
Three main goals were established. First, the goal of a “people community” was set to reach “15 millions of mutual visitors by 2020 annually” through cultural exchanges and supporting human resource capacity building projects. 2.46 million ASEAN visitors came to Korea, and around 9 million Koreans visited ASEAN countries in 2018. Second, the goal of a “prosperity community” was announced to build a cornerstone for mutually beneficial, future-oriented economic cooperation. Both Korea and ASEAN agreed to make efforts to reach $200 billion in trade by 2020. Given that the value of trade in 2017 was $114 billion and in 2018 was $160 billion, the 2020 goal appears feasible. Finally, the goal of a “peace community” is to construct a peaceful and safe environment in the region. The key activities toward this end are collective responses to anti-terrorism as well as cyber and maritime security and cooperation for building a peaceful Korean Peninsula.
In 2019, the Presidential Committee on New Southern Policy announced new key areas for a prosperity community, which extensively expanded from existing industrial fields such as infrastructure, tourism, commodity trade, and finance to innovative industrial fields related to industry 4.0 such as artificial intelligence, 5G, data economy, bio-healthcare, and digital commerce. Moreover, the establishment of the ASEAN-Korea Financial Cooperation Center in Indonesia helps both Korean and ASEAN firms improve financial accessibility. It will also help Korean financial institutes penetrate local markets and support both ASEAN and Korean firms’ participation in local infrastructure projects. For a people community, the committee declared its support for improvements in rural development and medical access for local residents based on the experience of the “Saemaeul Movement.” Moreover, by the expansion of scholarship projects, more international students and academics from ASEAN can visit South Korea.
The NSP is unique in many ways compared to previous ASEAN policies that Seoul implemented, taking policy scope, diplomatic level, and policy connectivity a step further. For example, in respect to policy scope, the NSP encompasses security and diplomacy, as well as economic and socio-cultural cooperation, while the previous ASEAN policy mainly pursued economic cooperation. In addition, the NSP emphasizes building and maintaining relations from the top to bottom levels with the partners of the NSP. In this regard, Moon Jae-in has visited India and all 10 AMS, holding summits since the announcement of the NSP in 2017. These efforts culminated in the ASEAN-ROK commemorative summit and the first Mekong-ROK summit of November 2019. This was an occasion to recall the last 30 years of Korea-ASEAN dialogue relations as well as to build a milestone for the next 30 years. The Mekong-ROK summit had additional meaning because it was held for the first time.
The background of the New Southern Policy
Understanding the background of the NSP helps to foresee its direction as it moves forward. Many analysts have explained why the NSP was proposed by pointing to push and pull factors in economic aspects. The first push factor is Korea’s need for new growth engines because its potential growth rate has recently continued to decrease due to a rapid change in its population structure. According to the data from Statistics Korea, about 50% of the total population will be over 65 years of age in 50 years. As the population ages, productivity will deteriorate, and the investment and savings rates will fall as well. The potential growth rate will also suffer from the swift reduction in the size of the workforce. Another push factor can be found in global economic uncertainty. From 1990 to 2007 globalization with diverse supply chains had pushed up global trade thanks to tariff cuts, cheaper communications, and lower transport costs. After the rise of domestic supply chains in China and other emerging economies, global trade intensity is decreasing because they are now consuming more of what they produce. Moreover, the US-China conflict may cause long-lasting damage to the global economy if it persists, although it seems to have been somewhat stabilized recently.
Under these risky circumstances Korea realizes that ASEAN and India have importance as a new growth engine, i.e., attractive elements which are recognized as pull factors. ASEAN countries and India have recorded high growth rates over the last 10 years. The total GDP of AMS reached $2.7 trillion in 2017, which would be the 6th largest national figure in the world. Moreover, the CIEM (forecasting agency) predicted that India will have the third largest GDP in the world in 2024. Both regions have large populations, and since the ratio of the young workforce to the total population is much greater than in South Korea, positive complementary relations exist in their production network. Another pull factor is that both ASEAN countries and India are rising as major trading partners for Korea. The ASEAN region has rapidly emerged as Korea’s second largest trading partner in recent years. Trade with both regions heavily relies on Korea’s FDI; inflow into ASEAN is greater than that into China, and ASEAN is the 2nd largest investment destination following the United States.
South Korea’s multinational firms and SMEs have jointly constructed their supply chains across the ASEAN region, actively and enthusiastically. Because their activities are mostly private-oriented, supportive policies of the Korean government for the firms rarely affected them directly before the launch of the NSP, which now considers their economic activities so valuable that it is not reluctant to work with private firms from both Korea and ASEAN. ASEAN local firms are expected to participate in the supply chains built by Korean firms within the region, contributing to more stable and efficient supply chains in the region.
The future direction of the New Southern Policy
The NSP can be interpreted as the outcome of Korea’s struggle for survival in a rapidly changing international environment. Since it focuses on fortifying relations with ASEAN and India, it may be misunderstood as distancing Korea from the US, China, Japan, and Russia. Rather, South Korea is advancing the NSP as a new multilateral framework to form new relationships along with the US, China, Japan, India, and ASEAN. Thus, the aim of the NSP is to establish more complementary relations with all of these partners in the Asia-Pacific region, making it easier to overcome Korea’s aforementioned difficulties by leading a new multilateral system in the region through the NSP.
Some may question if it is possible to effectively form complementary relationships with ASEAN countries, India, and the existing four major partners through the NSP. In the case of large-scale projects requiring massive financing, for example, there would be a burden for Korea to proceed only with AMS and India, as we know that India and most of the AMS are classified as developing countries. South Korea has to analyze its competencies and identify projects that are consistent with them. In order to drive projects beyond its capabilities, it is necessary to seek third party partners of the NSP. The best candidates for a third partner could be one of the major powers that can work in harmony with Korea’s development experience, in which AMS and India are interested.
Since the announcement of the NSP, unfortunately, little effort has been made to find like-minded third-party partners working together in the Asia-Pacific region, whose cooperation is necessary to better utilize Korea’s development experience. For example, Korea may consider the United States as a partner of the NSP. The vision of a “Free and Open Indo-Pacific” (FOIP) announced by President Donald Trump at the APEC leaders meeting in 2017 seems to share the values of Korea’s NSP: openness, inclusivity, and transparency. Given that the United States has recently suffered a reputational setback with ASEAN (in particular, after Trump decided not to attend the East Asia Summit in Thailand in November 2019, seven ASEAN leaders skipped the scheduled meeting with the United States), cooperation with South Korea, which has retained a good reputation within ASEAN, relying on the NSP and the Korean Wave, would, arguably, help to reestablish its position.
From the US point of view, ASEAN involvement is necessary for the US FOIP strategy to succeed. The United States, which belatedly recognized ASEAN countries’ geopolitical value, relayed Trump’s invitation to their leaders to attend a special US-ASEAN summit on its soil next year. Yet recovering lost relationships may need the subtle care and cooperation of like-minded partners, such as South Korea, which has recently enhanced its reputation through its NSP emphasizing “shared prosperity.” South Korea also held the ASEAN-ROK commemorative summit (which is usually held once every 10 years) this year—five years early—a sign that the AMS value South Korea. If the United States and South Korea participate in ASEAN development projects such as connectivity improvement projects together as partners, South Korea may contribute to improving the reputation of the US in ASEAN countries.
Indeed, the first aim of US FOIP strategy, announced at the 2017 APEC Summit, did not appear to be to contain China’s Belt and Road Initiative. Rather, the ultimate goal of the announcement may have been to deliver a message that like-minded countries and the US together can encourage China to adhere to higher standards of transparency, rule of law, and sustainable financing. That is why the US announced a vision for the FOIP for the first time at the APEC leaders meeting, at which commitments are usually non-binding. Moreover, at the Indo-Pacific Business Forum 2018, Brian Hook (the senior policy advisor to the secretary of state) stated, “The vision doesn’t exclude any nation. We welcome contributions by China to regional development.” This is evidence that the original US Indo-Pacific strategy would not alienate China, at least in the economic perspective. To gather more like-minded countries, the US needs to assure traditional allies. That is why it does not seem to force to participate in the US version of Indo-Pacific strategy. Australia, Japan, India and Indonesia are already pushing their own versions of an Indo-Pacific strategy. Thus, additional efforts by the US to work together with them is likely to be required.
The US Indo-Pacific strategy considers infrastructure development as a strategic tool. Although it has neglected infrastructure markets in the Asia-Pacific region for the last 30 years, ceding to Chinese penetration, the US is now refocusing on them. Secretary of State Mike Pompeo launched the Indo-Pacific Business Forum 2018 as a key economic pillar for the US Indo-Pacific strategy. In particular, he announced new funding primarily focused on the digital economy, energy market, and infrastructure. China may give the developing countries in the region the incorrect signal that they cannot grow under the existing rule of law and traditional sustainable financing. The case of Korea, which has grown successfully under the existing rule of law and principles, is a model, which can help to persuade them otherwise. Therefore, the United States and Korea can be good partners by jointly implementing the NSP and FOIP from an economic perspective. Of course, there is no need for South Korea and the US to limit the scope of their third- party partners. If transparency, openness, and inclusivity are the shared values, any country can qualify as a third-party partner. The question is how to build a complementary relationship with new third-party partners and produce better well-being in the Indo-Pacific.
* These National Commentaries were prepared in collaboration with the East-West Center in Washington.