Steps for Korea’s “graduation”
The Foreign Ministry announced on July 4 that the United Nations Conference on Trade and Development (UNCTAD) had decided to classify Korea as a developed country at its recent board meeting in Geneva.
It was interesting for me to watch how the news was reported in Korean media. On the one hand, it has been widely reported that this is the first time that UNCTAD has improved the classification of a country from “developing” to “developed” since its inception in 1964.
At the same time, it was also widely reported that Korea’s “graduation” took place in several stages. Many articles as examples of previous steps referred to Korea’s membership in the Organization for Economic Co-operation and Development (OECD) and its subsequent membership in the OECD Development Assistance Committee. While believing that Korea’s “graduation” is still a work in progress, I want to share my own experiences of working on Korea’s accession to the OECD in 1996.
Then, President Kim Young-sam, from his inauguration in 1993, focused on internationalization and globalization as important objectives of foreign and economic policy. As the Director of International Trade at the Ministry of Foreign Affairs, I was very encouraged by this, as I believed it was the right way forward for Korea as a nation in the post-war world. cold, where the ideological confrontations of old were replaced by reconciliation and cooperation, and where new economic and diplomatic opportunities emerged for Korea. Edward Luttwak summed up the trend of the time as “from geopolitics to geo-economics,” which has become one of my favorite quotes.
It is in such a context that the Korean government decided to join the OECD. Korea applied for membership in March 1995. The following month Korea opened a membership office in Paris, which I joined the following year.
The OECD has decided to conduct a review and review of Korean laws and regulations in 11 committees on issues such as capital movements, international investment, international trade, banking, policing. insurance, labor relations, education, agriculture, climate change, the environment and shipping.
Examining and discussing some issues was closely related to the structural problems of the Korean economy and society and proved to be more difficult. One of those issues was Korea’s developing country status, which emerged as a critical issue in the OECD Trade Committee’s review.
In the end, Korea summed up its position on developing country status as follows: Korea had participated in the Uruguay Round as a developing country and should retain the same status for its implementation. However, Korea will participate in subsequent multilateral trade negotiations as a member of the OECD, with exceptions in both agriculture and climate change.
Korea, when its status as a developing country was subsequently challenged in many international fora, especially at WTO meetings, used to stick carefully to the aforementioned “OECD formula” of its status. from developing countries.
It continued until 2019, when Korea decided to drop the exception on agriculture. The exception in the climate change sector has in my opinion become moot with the emergence of the concept of Nationally Determined Contributions (NDCs) and Article 9 of the Paris Climate Agreements.
Another particularly difficult and important issue was Korea’s implementation of the OECD codes on the liberalization of capital movements and current invisible operations. Adherence to the codes was an important indicator of the compatibility of the economy applying the OECD principles. In the relevant joint committees, as an “OECD observer” later reported, Korea agreed to immediately implement only about 65 percent of the OECD liberalization codes.
However, Korea maintained that the country’s past efforts to liberalize the movement of capital, services and investment clearly demonstrated its commitment to further liberalization. The relevant committees have acknowledged these assurances from the Korean government.
The Employment, Labor and Social Affairs Committee (ELSAC) was almost the last committee to conclude Korea’s review and revision. Even after Korea joined the OECD in December 1996, ELSAC found that Korea’s subsequent reform fell short of Korea’s commitments. The committee continued to monitor Korea’s progress in labor relations reform until 2007.
Less than a year after joining the OECD, Korea was mired in the Asian financial crisis, which was attributed in part in Korea to “premature” membership in the OECD. Korea has attempted and succeeded in emerging from the crisis through reforms in four sectors that have accelerated, rather than retracted, liberalization. It is for this reason that the financial crisis has been called a “blessing in disguise” for Korea by many overseas observers.
But, it wasn’t until 10 years later, in 2008, during the global recession while I was working as a G20 Sherpa, that I was able to understand better than the reform in four sectors, introduced and implemented. during the Asian financial crisis, was in fact timely. by further streamlining the Korean economy, which ultimately softened the impact of the global recession.
Ahn Ho-young ([email protected]) is president of the University of North Korean Studies. He was Korean Ambassador to the United States and First Deputy Minister of Foreign Affairs.