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According to Pulse by Maeil Business News Korea,

South Korea’s chip and battery sectors are expected to benefit most from the U.S.-led Indo-Pacific Economic Framework (IPEF) that focuses on trade, supply chain, clean economy, and fair economy.

According to the Ministry of Trade, Industry and Energy on Monday, IPEF participating countries including Korea, the United States, and Japan reached consensus on ministerial statements for each of the four pillars – trade, supply chain, clean economy, and fair economy. The consensus was made at the first official in-person ministerial meeting on Sept. 8 in Los Angeles where Korea’s Trade Minister Ahn Duk-geun attended.

The IPEF that counters China amid intensifying rivalry between Washington and Beijing is expected to allow Korea to benefit from the joining of supply chain in advanced areas like chips and batteries as well as in contents exports.

But Seoul faces the difficult challenge of persuading Beijing to sustain economic cooperation with the country’s biggest export market.

“IPEF is participated by resource-rich countries like Australia and Indonesia and technology powerhouses like the U.S. and Japan,” said Jang Mi-hwa, head of IPEF at Korea’s trade ministry. “Cooperation in supply chain will be possible for the stabilization of supply chain of our key industries like chips and batteries.”

Australia accounts for the largest 55 percent of world’s lithium production and is considered a key partner for the stabilization of secondary battery supply chain.

IPEF members can exchange reserves at times of emergency, according to foreign media reports.

“The 14 nations in the U.S.-led IPEF will consider creating a formal system for sharing semiconductor devices, medical products and other vital supplies during international emergencies,” Nikkei said.

Market watchers noted that a system that allows stock exchanges in times of emergency like a currency swap will help diversify and stabilize supply chain in Korean industries.

The Korean government will be able to seek stable supply for key minerals in chips and battery sectors through IPEF on top of U.S.-led Mineral Supply Partnership (MSP).

The ministerial consensus also includes the countries sharing supply chain-related information and establishing a joint response and early warning system. The members aim to share efforts to resolve supply chain bottleneck and expand distribution infrastructure.

In trade, new regulations will be made related to digital economy, which will benefit Korea that has seen a surge in content exports like dramas and films over the past several years but in absence of data transfer or standardization in content trade.

“It is affirmative that the consensus contains efforts to accelerate digital trade such as cross-border data transfers rather than opening of markets through lowering of tariffs,” said Ahn Chang-yong, director of FTA policy planning at the trade ministry. “Korean companies will be able to advance into ASEAN market.”

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Source: Pulse by Maeil Business News Korea (Sept. 13, 2022)