ABSTRACT:
As a developed country in East Asia, South Korea has chosen to export as a strategy for economic development in general and international trade development in particular for decades. During the development process, the South Korean’s government has adopted many flexible international trade policies for certain historical and economic periods. For example, in response to the crises of 1997 and 2008, the South Korean’s government implemented a policy of trade liberalization. In 2018, when the trade conflict took place, the country’s government had new strategies in its trade policy. With the "south trade policy" along with the export of new technology products, the South Korean’s government continues to create a prosperous country in Northeast Asia. From their studies, the authors draw lessons and suggest some implications for international trade development in general and trade protection in particular of Vietnam in the current context.
Keywords: Trade protection, trade policy, South Korea, economic growth, trade liberalization.
1. Background
The theory of international trade first mentioned was the call for free trade proposed by Adam Smith (1776). Later, the Friedrich List (1841) did not agree with the liberalization of trade, which he called for the protection of small industry production and exports. Until now, the issue of which policy choice depends on the practice of each country.
South Korea is a country of choice for export as a driving force for economic growth. During its development, the South Korean government introduced trade policies such as trade protectionist policies for export of industrial goods and then promoted free trade, so it is the choice of these trade policies a prerequisite for creating a miracle of the Han River and helping the country overcome economic crises? This is the subject of the author's research and thereby implications for developing international trade of Vietnam.
2. Content
2.1. International trade policies have been adopted by South Korea in recent years
- South Korean trade policies from 1960-1990
The economic model pursued by South Korea is a developed capitalist economy built on the basis of a market economy. Although the state's intervention in the economy is very small, the South Korea’s government always has a reasonable combination of state and market to some extent. From 1960 to 1980, South Korea's economic growth was based on heavy manufacturing and car manufacturing. During its development process, the South Korea’s government introduced many major policies and movements along with the implementation of economic development plans. All plans are aimed at industrializing and expanding the Korean market. With this economic philosophy, the South Korea’s government has set a trade protection policy for the industry. South Korea only allows imports of basic commodities needed for the economy, while exports are focused on. In 1962, the South Korea’s government embarked on an export-based industrialization. The content of this policy includes regulations and guidelines on the protection of small industries, science and technology, public finance, foreign direct investment, intellectual property and financial policies. South Korea sets growth targets with special emphasis on: (i) state-led industry through protecting the market and domestic industries, (ii) cultivating large industrial groups such as Samsung, Hyundai, LG, and Daewoo, (iii) provide privileges to export-oriented manufacturing companies, (iv) control banks and provide necessary capital for the industry. through foreign loans, (v) promoting technological development in the domestic industry, and (vi) creating a high quality and low-cost workforce by controlling the labor movement. close action. The main objective of South Korean industrial policy in the 1960s was to expand exports of intensive industrial goods and consumer goods. Therefore, the South Korea’s government imposes very high taxes to protect consumer goods. The average consumer goods tariff in the study of Hong and Kim (1996) by weight, was 74.82% and 79.74% in 1966 and in 1968, respectively. However, South Korea’s government imposes relatively low tariffs on other commodity manufacturing industries as the industry is not the primary target of government support and the products of the goods manufacturing industry are used to manufacturing in consumer goods.
In addition to tariffs, South Korea’s government has adopted many export support policies, including; compensation to encourage export, reduce corporate income tax and income tax, exempt tariffs for imported materials for export, provide financial support and reduce electricity bills and rail fares. Financial incentives such as tariffs on import of duty-free raw materials have encouraged the production of export goods, stimulating growth in the textile and electrical industry. South Korea has a comparative advantage in these industries so labor attracts highly educated and highly motivated workers with low wages.
Thus, during the 1950s and early 1960s, South Korea adopted an original protection strategy: replacing import policy with industrial export and consumer goods.
In the early 1970s, the country continued with its policies of restricting imports and increasing exports. However, exports are focused on heavy industries. The production of automobiles began while imported cars virtually disappeared from the market. Export growth is about 45% per year in South Korea. South Korea was only the 40th largest exporter of goods to the United States in the 1960s, but by 1986 it became the fifth largest exporter.
Since 1980, South Korea's export-driven economic growth has been internationally recognized. However, globalization has affected Korea's export policy. South Korean policymakers have realized the need to open markets and create more competition and increase the international competitiveness of domestic industries. Therefore, the South Korea’s government has implemented a policy of exporting electronics and high technology to replace heavy industry exports and consumer goods. Import restrictions have been removed. In 1986, the country achieved a favorable trade balance for the first time, with a trade surplus of 4.2 billion USD. However, changes in trade policy eventually led to challenges in the 1990s.
- The Republic of Korea implemented the policy of trade liberalization, improving international competitiveness in the period of 1990 – now
Since the beginning of 1990, domestic consumption of luxury goods in South Korea has increased. Those were high-tech and electronic products. This has reduced exports resulting in Korea's trade deficit and current account deficit. In the face of this situation, South Korea immediately reduced its tax rates and restricted imports of cars, high-tech products and financial services. Until 1997, the Asian Economic Crisis occurred, political and economic conditions, both external and internal, caused the traditional trade policy model, which was under heavy pressure in the late 1990s, became obsolete in South Korea. South Korea's top policy makers have also realized that the influence of the WTO will have an impact on the country's traditional export market. Therefore, South Korea will easily fall into crisis if dependent on exports. Under these circumstances, the South Korea’s government began to remove trade barriers, primarily in non-agricultural production, with the belief that trade liberalization would enhance the international competitiveness of the country. national and consumer welfare. To support trade liberalization, the Korean government has implemented a floating exchange rate. By these measures, South Korea quickly restored the economy before the crisis. Especially since the 2008 crisis, South Korea has become a strong supporter of multilateral trade liberalization. By participating in trade liberalization, the country will have access to new markets around the world with the advantage of reducing costs such as tariffs and non-tariff barriers. Typically for this policy, South Korea was the first country in East Asia to sign a Trans-Pacific free trade agreement with Chile in 2002.
Currently, South Korea is a leading country in implementing a new model of growth through green development strategy. With this philosophy, the country is promoting the development of high-tech industries (nuclear, electronics, information technology, biology, new materials, new energy, green-blue technology) and considers it a key export industry now. In 2018, in parallel with the trade war between the US and China, a trade conflict between South Korea and Japan took place involving a series of disputes over export control of high-tech materials. Korean exports face many advantages and difficulties. One of these advantages is the fact that South Korea has signed a free trade agreement with both China and the United States. This could serve as an economic opportunity for Korea, allowing them to trade in a way that cuts tariffs. However, South Korea may suffer worse than the advantage. Therefore, the best option of the South Korea’s government is to develop an alternative plan to prepare to apply additional tariffs on Korean imports in the US market or build factories in the US. In addition, the South Korean government should consider seizing market opportunities in areas that have not been previously traded and negotiated. The most attractive markets include members of the Association of Southeast Asian Nations (ASEAN) and South America. The South Korea’s government has strengthened economic cooperation with ASEAN countries through the "New Southern Policy". This could benefit both sides by providing new export bases for South Korea and allowing ASEAN and South American countries to receive investments from South Korean companies to develop new industries. Thus, the trend of shifting multilateral trade relations to bilateral relations has been focused and paid attention by the South Korea’s government.
2.2. Lessons learned and implications on the role of the Government of Vietnam in implementing trade policies
* Lesson learned
Firstly, the South Korea’s government has implemented appropriate trade policies that contribute to economic growth. In the 1960s, the South Korean economy was underdeveloped, the South Korea’s government raised capital by borrowing from abroad, and increased exports of heavy industrial goods. Besides, the South Korean government has restricted imports to facilitate domestic production. As a result, South Korea has had a stable capital as well as an economic environment to avoid external and internal shocks. Although from 1960 until before 1997, the South Korea’s government implemented trade protection policies but each period was different. South Korea's export protection not only stopped heavy industries but also turned to electronics and high-tech industries.
Support for free trade policy helped South Korea overcome the crisis in 1997 and 2008. Until 2018, with its sharpness, the South Korea’s government had cleverly acted as an intermediary between the two countries. at the same time finding new markets in ASEAN countries and South America. With proven facts, the South Korea government’s intervention in trade policy has created a miracle of growth for this country.
Secondly, the Republic of Korea has played an important role in selecting economic growth models and appropriate economic policies from time to time to promote trade development. The choice of economic models and policies is very important. After the end of the war with North Korea, the South Korean economy was extremely poor and relied heavily on aid. In this situation, the revival of the Korean economy had to originate from industry. The industrialization has helped South Korea have facilities - technology for building a new economy. With a growth strategy thanks to the export of heavy industrial goods, and then the export of electronics, technology has created Korea as a trading center in Northeast Asia.
Under the influence of globalization and regionalization, the South Korea’s government has realized the need to re-select economic growth model as well as trade policy. Since 1997, South Korea has been pursuing an export-led economic growth model. However, South Korea's exports at that time focused on electronics and automobiles. Particularly in pursuit of this model, the South Korean government has implemented economic stimulus to stimulate production and encourage domestic consumers.
In 2018, when the trade conflict took place, the South Korea’s government implemented a growth model towards potential export markets with the development of new industries. With this economic philosophy, South Korea gradually became independent of world trade, but also exploited new markets and new industries.
Thirdly, the South Korean government has always made efforts to perfect public policies as well as perfect regulations on trade technical barriers to facilitate trade development. After the economic crisis, South Korea changed its trade policy and reformed taxes to contribute to growth and attract trade and investment. The government has continued to support a number of large enterprises (shipbuilding, cars, electronics) with competitive industries and a large market share in the world. South Korea has also prioritized and selected three industry groups as the driving force for sustainable growth: green technology, high industry and value-added services. This industry will create growth and expand export markets in the future.
Implications for international trade development in Vietnam:
From 1975 until before 1986, Vietnam implemented a central planning economic model and the economy was closed. Import volumes were determined based on forecasts of differences between domestic demand and supply. Therefore, trade policy instruments were not used to support industrial policy.
Since 1986, Vietnam has pursued a socialist-oriented market model. The country’s trade policy has also been reformed and renewed. The state has allowed liberalization of domestic prices and connection with world prices. Besides, Vietnam has participated in regional and world economic integration. Initially, the state deployed protective tools in trade policy to protect domestic production. With this policy, in 1989, Vietnam abolished import quotas for all goods, except for 14 import items. By 1995, the government abolished export quotas for all goods except rice. In 2003, the government imposed a tariff quota on raw milk, salt, etc. The purpose of this policy was to protect domestic industries with a competitive advantage. After that, the state implemented trade liberalization to improve export incentives. Facing the request of trade liberalization, the Vietnamese government has committed and removed the tariff and non-tariff barriers in accordance with WTO rules.
However, since 2018, the trend of trade protection has been popular in the world. Developed countries such as the US, Japan, China and EU increase the use of sophisticated trade protection measures. Developed countries make compulsory technical requirements, quality standards and environment to protect domestic production. Typically, there is a trade war between the US and China; South Korea - Japan trade conflict. This will affect trade for other countries including Vietnam. Besides, the trend of bilateral cooperation takes place more than multilateral. Therefore, the role of the Vietnamese state in trade policy should be clearly defined:
Firstly, the state needs to identify appropriate growth models under the new conditions, taking green economic development as a goal for sustainable development and a motivation for trade development. The international and domestic context is always volatile, so it is absolutely necessary to determine the appropriate growth model for each period. At present, the impact of the fourth industrial revolution has been evident in many areas, especially in the field of economics and digital technology. Vietnam needs to have the capacity and spirit to accept the opportunities and challenges from this revolution to promote economic growth. Good economic growth in Vietnam will create a premise for capital accumulation, good capital accumulation will boost growth and contribute to boosting foreign trade. It should be understood that no growth model is immutable, appropriate changes to adapt, to develop and to be more sustainable in the future are what all countries look forward to.
Secondly, the government needs to choose clever trade policies and invest in exporting key industries with competitive advantages. Besides, trade promotion is needed to find new markets for industries. The year 2019 marked the fourth consecutive year that Vietnam had a trade surplus with a total export and import turnover of US $516.96 billion, of which, the trade surplus reached US $9.9 billion, the highest in four consecutive years of trade surplus. According to the General Statistics Office, in 2019, Vietnam had 32 items with export turnover of more than US $1 billion, accounting for 92.9% of total export turnover, of which 6 items reached Kim. export turnover was over US $10 billion, accounting for 63.4%. This is a testament to the clever trade policy selection and investment options in Vietnam's advantageous products in recent years. In the new context, when the world economy still has many instability factors, economic and trade policies of major economies such as the United States and the EU can change quickly and have multidimensional impacts. With trade conflicts among countries growing, Vietnam needs to adjust its trade policies more flexibly to ensure sustained growth.
Thirdly, the state needs to improve regulations on technical barriers in trade. In the event that the major economies all have sophisticated trade protectionism, even if some countries are willing to violate WTO rules to protect domestic production, Vietnam needs to take measures as well. more effective to increase the protection of our trade. The State should promote the completion of regulations on technical barriers in trade in general and international trade in particular. In addition, the authorities need to intensify research and apply preventive and anti-dumping measures, subsidies for domestic enterprises. Besides propagating and disseminating information on measures to domestic manufacturers to understand the law.
3. Conclusion
Globalization and international economic integration are an indispensable factor in the economic development of each nation. In the context of fluctuating international trade today, adjusting appropriate trade policies towards liberalization combined with trade protectionism is an effective solution for economies. The South Korea’s government has made reasonable policies to bring the country's economy to strong growth. Vietnam also has similar conditions with South Korea, so it is possible to draw lessons from South Korea’s development policy to apply creatively, flexibly and effectively in accordance with the practical conditions of Vietnam.
REFERENCES:
- Myuong - Shik Kim (2013). Institutional varieties of productivist welfare capitalismin East Asia. University of Pittsburgh.
- Iaewon lee (2013). South Korea’s export control system. Sipri background paper, Korea.
- Economy of South Korea. (https://en.wikipedia.org/wiki/Economy_of_South_Korea) (Accessed 20 April 2020).
- South Korea economic growth and development, (https://www.tutor2u.net/economics/reference/south-korea-economic-growth-and-development.) (Accessed 20 April 2020).
CHÍNH SÁCH THƯƠNG MẠI QUỐC TẾ CỦA HÀN QUỐC
VÀ BÀI HỌC KINH NGHIỆM CHO PHÁT TRIỂN THƯƠNG MẠI QUỐC TẾ
CỦA VIỆT NAM HIỆN NAY
NGUYỄN THỊ HẠNH
Trường Đại học Sư phạm, Đại học Thái Nguyên
NGUYỄN THỊ NHUNG
Trường Đại học Sư phạm Hà Nội 2
TÓM TẮT:
Là một quốc gia phát triển ở Đông Á, Hàn Quốc đã lựa chọn xuất khẩu là chiến lược phát triển kinh tế nói chung và phát triển thương mại quốc tế nói riêng qua nhiều thập kỷ. Trong quá trình phát triển, Hàn Quốc đã đưa ra nhiều chính sách thương mại quốc tế linh hoạt theo giai đoạn lịch sử, kinh tế nhất định. Chẳng hạn, để đối phó với các cuộc khủng hoảng năm 1997 và năm 2008, Chính phủ Hàn Quốc đã thực hiện chính sách tự do hóa thương mại. Năm 2018, khi xung đột thương mại diễn ra, Hàn Quốc đã có những chiến lược mới trong chính sách thương mại. Với “chính sách thương mại hướng Nam”, cùng với xuất khẩu những mặt hàng công nghệ mới, nhà nước Hàn Quốc tiếp tục tạo nên một đất nước thịnh vượng ở khu vực Đông Bắc Á. Từ những nghiên cứu về chính sách thương mại quốc tế của Hàn Quốc, nhóm tác giả rút ra những bài học kinh nghiệm và đề xuất một số hàm ý trong phát triển thương mại quốc tế nói chung, bảo hộ thương mại nói riêng của Việt Nam trong bối cảnh hiện nay.
Từ khóa: Bảo hộ thương mại, chính sách thương mại, Hàn Quốc, phát triển kinh tế, tự do hóa thương mại.
