U.S.-South Korea Policy Coordination on Advanced Technology

On November 1, 2023, the Council on Foreign Relations’ program on U.S.-Korea Policy held a virtual workshop on U.S.-South Korea policy coordination toward China on advanced technology. This workshop was made possible by a generous grant from the Smith Richardson Foundation.

Introduction

In response to the Chinese government’s aspirations to assume a leading role in the field of science and technology, the Joe Biden administration has redoubled its efforts to strengthen technological cooperation with like-minded allies and partners, including South Korea, to shape a rules-based technology ecosystem. To those ends, the Biden and Yoon Suk Yeol administrations have worked to upgrade the U.S.-South Korea alliance to a global comprehensive strategic alliance, which seeks to deepen bilateral cooperation on critical and emerging technologies.

The growing centrality of technology in the U.S.-China geostrategic competition poses unique challenges, opportunities, and strategic considerations for the U.S.-South Korea alliance. The two allies are laying the foundation for a more resilient and robust partnership by strengthening their policy coordination on technology, particularly as next-generation technologies continue to shape and transform the nature of security and economics.

Lack of a Common Objective

As the scope of the U.S.-South Korea alliance expands from its traditional focus on security to include technology and economic cooperation, both sides should revisit the fundamental assumptions underlying the relationship. One of the challenges to a durable U.S.-South Korea technology alliance is determining a common objective within the newly expanded partnership. The Biden administration’s National Security Strategy, released in October 2022, highlights the need for the United States to maintain its technological leadership so that it can limit China’s growing ability to reshape global norms. Furthermore, the strategy stresses the importance of strengthening technological ties with partners in the Indo-Pacific and Europe. A core element of those ties is the sharing of technical expertise and capabilities to better withstand attempts by strategic competitors to degrade shared technological advantages.

However, the U.S. security rationale for countering China’s technology-based threat does not articulate the tradeoffs its allies are likely to experience or justify the heightened risks they assume. The Yoon administration has prioritized the U.S.-South Korea alliance and its Indo-Pacific strategy, but it has faced significant domestic criticism over the prospective economic costs. Some workshop participants argued that U.S. officials have offered little assurance to South Koreans that a robust economic and technology-based alliance will offset the losses they will likely face in the Chinese market from implementing export controls or efforts to decouple, de-risk, and reshore from China.

The lack of a specified common objective is exacerbated by the two allies’ differing threat perceptions of China. The United States views China’s state-driven innovation in critical technologies as a threat to U.S. national security; thus, the Biden administration has placed a high priority on maintaining a competitive edge in the technological and economic sectors. Meanwhile, South Korea continues to pursue a relationship with China of “mutual respect,” as China remains South Korea’s largest trading partner and a significant market for South Korean businesses. While the South Korean government agrees with certain U.S. concerns, such as the risk of dual-use technologies and novel threats in warfare posed by emerging technologies, it is hesitant to fully align with U.S. efforts in the technological space.

Workshop participants disagreed on whether the U.S. characterization of the China threat was overdone or unclear. Some participants believed the United States was overstating China’s threat based on the ideology and nature of the Chinese Communist Party, which would not suffice to persuade the South Korean government and private sector to fully align with U.S. efforts. Such justifications could persuade the South Korean government to support U.S. restrictions on Chinese technological products, but the U.S. goal of creating a new technological ecosystem or restructuring global supply chains in a manner that excludes China is currently viewed as excessive by many South Koreans. Other participants noted that the Biden administration had been clear in communicating its intentions and stating that U.S. efforts were not aimed at a broader economic decoupling with China, suggesting that the gaps in U.S. and South Korean threat perceptions toward China could be the reason South Korea hesitates to fully align with U.S. efforts.

Recommendations

• The United States should further clarify its intentions regarding the strategies of de-risking and decoupling, as well as the objectives for China-related technology restrictions and friendshoring. In doing so, U.S. officials should more directly acknowledge or address the tradeoffs and risks likely to be experienced by its allies and partners in the process of reducing economic ties with China.  
• The United States and South Korea should establish a common understanding of and strategy for addressing the threat China poses in the field of technology.
• The United States and South Korea should enhance policy coordination dialogues. Doing so would facilitate greater trust and confidence between the two countries, as well as reduce credibility concerns within South Korea toward U.S. intentions and leadership.

Balancing Costs and Benefits

A cost-benefit analysis of South Korean alignment with the United States in economic and technological competition with China shows great costs and risks for South Korea’s economic security. Some workshop participants noted that South Korea’s dependence on Chinese imports and markets increases the risk of potential economic retaliation by China against South Korea. While China has not yet retaliated against the Yoon administration—as it did in 2017, when South Korea deployed the U.S. Terminal High Altitude Area Defense (THAAD) system—China continues to criticize the Yoon administration for participating in U.S.-led initiatives in the Indo-Pacific region and providing rhetorical support for Taiwan.

However, while South Korea could see losses from supporting U.S. efforts to decouple, de-risk, or enact export controls against China, aligning with the United States could provide opportunities for the country in new markets, new regional economic blocs, resilient supply chains, and early adoption of new critical and emerging technologies standards. Those benefits have the potential to maximize South Korea’s long-term economic and strategic interests, but they need to be made more explicit. Some workshop participants also noted that South Korean companies such as Samsung and SK Hynix have business rationales—such as rising labor costs and intellectual property theft, which are independent of the United States and its focus on decoupling or de-risking—for diversifying their markets away from China.

Recommendations

• The United States and South Korea should work to reduce South Korean vulnerabilities to potential economic coercion. In doing so, the two countries should craft contingency plans for various scenarios such as trade disruptions, similar to measures outlined in the Group of Seven (G7) Hiroshima Leaders’ Communiqué.
• The United States and South Korea should strengthen their collaboration in science and critical technologies by prioritizing low-risk and easily achievable initiatives. Such initiatives involve promoting investments, joint research and development, establishing common standards for critical and emerging technologies, and implementing cybersecurity measures within agreed-upon frameworks.
• South Korea should diversify its trade partners and supply chains to reduce the risks facing its overseas companies. In addition, South Korea should enhance diplomatic and economic ties, as well as multilateral coalitions, with countries that share similar concerns about China’s economic influence and potential economic retaliation.
• South Korean companies should communicate their concerns about U.S. regulations and South Korean government pressures to ensure that private sector actors move in tandem with the South Korean government’s vision.

A New Approach for Economic and Technological Partnership  

As the U.S.-South Korea alliance expands and evolves into a technological alliance, the two countries should approach cooperation in emerging and critical technologies and supply chain resiliency differently from the traditional security framework. Addressing new dynamics within the alliance and institutionalizing public-private partnerships present significant challenges for the economic and technology-based alliance. In particular, the United States and South Korea will need to prioritize addressing the competitive nature of the private sector in both countries, as well as potential gaps or misunderstandings between the public and private sectors.

Participants also discussed the prospects for the Chip 4 alliance. While the four countries of the Chip 4 alliance—the United States, South Korea, Japan, and Taiwan—have specialized strengths in the semiconductor industry that could collectively contribute to a more resilient supply chain, some workshop participants noted that the four countries have different interests and threat perceptions related to China. South Korea was viewed as the most vulnerable to decoupling or de-risking from Chinese markets. Due to the different definitions of “alliance,” spanning security alliances such as the North Atlantic Treaty Organization (NATO) and economic alliances such as Chip 4, participants questioned whether the four Chip 4 countries have sufficiently defined the nature and extent of the grouping. Challenges remain in defining the precise workings of economic alliances and addressing obstacles to technological cooperation.

The United States and South Korea will continue to focus on critical and emerging technologies that have the potential to serve as strategic assets for influence and leadership. Thus, the two countries should establish new mechanisms for shaping the rules and norms of the new domains in security and economy.

Recommendations

• The United States and South Korea should actively involve private sector actors in government-to-government dialogues and regularize working-level meetings with representatives from top U.S. and South Korean corporations.
• The South Korean government should strengthen coordination with the private sector by expanding existing forums for public and private stakeholders to discuss the opportunities and challenges within the context of economic security and the U.S.-South Korea technological partnership.
• Chip 4 member countries should more clearly define the meaning of an alliance in the context of technology cooperation. In particular, the four countries should discuss whether the alliance will engage in “collective resilience” in the event that China retaliates against one of the four countries.
• The United States, South Korea, Japan, and Taiwan should meaningfully and transparently discuss their different interests and agendas as related to the Chip 4 alliance. Without a shared understanding of their diverging interests, identifying a mutually beneficial strategy that incentivizes greater collaboration and active engagement within the Chip 4 framework will be difficult.