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[Business Diplomacy] 'Ample room for business diplomacy with the US'

GR Company strategist talks about Korea's diplomatic engagements for business with the US, shares outlooks after upcoming elections

June 24, 2024 - 14:14 By Kim Hae-yeon
James Fatheree, executive director of The GR Company (The GR Company)

This article is the second installment in a series of interviews and analyses on how South Korean corporations can sharpen their diplomatic capabilities to brighten their prospects for overseas growth in this mega-election year around the world. -- Ed.

South Korea has ample room to strengthen its business diplomacy with the United States, particularly in trade and pivotal sectors such as clean energy and digital technology, according to James Fatheree, an executive director of The GR Company and a seasoned veteran with over 25 years of experience in trade affairs and economic cooperation between Asia and the US.

South Korean President Yoon Suk Yeol and his US counterpart Joe Biden are aligned in their stance against economic coercion, the necessity of effective export controls, the significance of supply chain resilience and stable critical mineral supply, and their commitment to fostering an inviting investment environment for each other's countries.

Although they share common values, procedural hiccups and conflicts of interest happen. This is when a diplomatic offensive is needed.

"There have been some problems with details and in execution, most notably with the IRA, when Korean-branded EVs manufactured in Korea were not eligible for the subsidies provided to domestic US manufacturers. Korean officials were quite vocal about their concerns,” Fatheree said at his office in Washington, DC, during a recent video interview with The Korea Herald.

“Ultimately a workaround was devised through the rule-making process. These are all complicated issues, so having fundamental trust and shared values and objectives helps the governments to work through it.”

Currently based in The GR Company's Washington office as executive director, Fatheree previously served as vice president for Asia at the US Chamber of Commerce, leading the regional team covering Korea, China, Japan and Southeast Asia. He played a leadership role in managing the Chamber's work on the US-Korea Free Trade Agreement, and also acted as former president of the US-Japan Business Council.

Like-minded partners and commitments

Fatheree explained that Washington has seen more Korean conglomerates setting up offices to monitor what is happening in the US and that organizations like the Korea International Trade Association, which has been in Washington for a while, are important since they could dedicate the kind of resources necessary and commit to building an economic relationship between the two countries.

"Given the economic success of Korea and the global prominence of Korean companies, APEC 2025 provides a great platform and opportunity to showcase Korea and scale up diplomatic engagements in ways that reflect the great potential it has to influence change that benefits it and like-minded partners."

For Korean companies looking to expand business in the US, adopting a mix of direct engagement and employing skilled lobbying firms can enhance their effectiveness in navigating the complex US political landscape.

"The first step is always to identify who the key stakeholders are both from the advocacy side, those who want to see the issue happen, and then on the decision making side, who is it that controls the decision making outcome. And then you start to work on an engagement strategy or campaign."

A shortcut suggested by the director for Korea is learning from the strategic approaches of countries like Japan.

"Japanese companies have been at it longer than Korea as major investors in the US, so they have a deeper understanding of the system, players and political dynamics," he said.

Most Japanese companies have Washington offices and staff, and use outside consultants or lobbying firms simultaneously. "The best ones are those that establish relationships with members of Congress in districts or states in which they operate, both in Washington and the state capitals."

Fatheree explained that Japan's strategy for being influential in regional dialogues, organizations and negotiations, including commitments of personnel and financial resources, seems to have significantly improved since 2012.

This is when former Prime Minister Shinzo Abe made Japan’s influence on the global and regional stage a top priority. The sitting PM Fumio Kishida is building on this foundation, as evidenced by Japan’s leadership in the G7, he said.

The Biden vs Trump economy

When comparing US President Biden and his predecessor Donald Trump's trade policies ahead of the election in November, Fatheree said that Biden is relatively straightforward and easier to understand, while Trump can be more unpredictable in some ways, but very predictable in others.

"With the Biden administration, trade is not a priority, at least in the traditional sense that the administration is not seeking market-opening trade agreements that help US exporters. These policy objectives can often come into conflict because of the complicated nature of them," he said.

"Trump’s approach on trade, like foreign policy and the alliance, is transactional but always weighted to making sure the US gains an advantage or does not bear the brunt of the financial burden. This would be especially relevant in the context of Korea’s support for US forces in Korea, as we know from last time."

The executive director mentioned that, given Trump's well-known obsession with trade balances as an indicator of relationship health, the US trade deficit with Korea ($40 billion in 2023) will make Korea a target for trade action.

"Recall that Trump wanted to terminate the US-Korea Free Trade Agreement in 2017-2018 before cooler heads prevailed and a few slight adjustments were made to it. Trump has talked about across-the-board tariffs of 10 percent, and possibly more, so the Korean government and Korean companies should be on the watch for those kinds of measures."