By Kim Sung-jin
Staff Reporter
South Korean businesses gave mixed responses to U.S. President George W. Bush’s victory, with some forecasting improved business conditions from the re-election of the incumbent leader and others fearing more problems.
A local private think tank also warned of a possible adverse impact from Bush’s re-election on the Korean economy.
Korean businesses are divided on what another four-year term for Bush will mean for their businesses, with some reacting with relief to Bush’s victory, interpreting his second term in office as the continuation of relatively stable U.S. economic growth, which will contribute to increased exports to the U.S.
Others, however, are frustrated by the Bush victory. They are worried about the potential negative effects of Bush’s re-election, such as the Bush administration’s adherence to a hard-line stance in dealing with foreign affairs, continuing high crude oil prices and threats on Korean businesses by terrorist groups.
Business and economic organizations and local conglomerates are paying keen attention to whether Bush intensifies his first-term approach or whether he seeks to alter some of his political and economic policies during his second term.
Their single biggest question is how Bush governs, as Republican dominance of virtually every quarter of the U.S. political system, including the White House and Congress, is assured for the next four years, especially with a 55-45 split between Republicans and Democrats, giving Bush’s party a 10-vote advantage over the opposition.
The dominant view among local businesses is that the high crude oil prices and the weak dollar, concerning as they do the two major variables in current global economic growth, will persist for quite some time with the re-election of Bush.
Mixed Reactions
The Federation of Korean Industries (FKI) released prospects last week that suggested, when viewing only the U.S. economy alone, re-election of the incumbent president was more desirable for Korean firms, but the re-election may also simultaneously bring about adverse effects for Korean businesses due to a hard-line North Korean policy. The FKI is yet to announce its official response to Bush’s victory.
The Korea Chamber of Commerce and Industry (KCCI) said the re-election of Bush would exert a positive influence on Korean exports to the U.S. because the president is market-friendly and supports free trade. Nevertheless, the KCCI warned that U.S. trade pressure on Korea may increase, depending on the direction of the U.S. economy, and advised Seoul to strengthen bilateral ties with Washington.
The Korea Federation of Small and Medium Business (KFSB) commented that Bush’s victory could clear the way for a resumption of six-nation talks on the North Korean nuclear threat and help the South-North Economic Cooperation Project to get back on track soon.
The Samsung Group predicted that there would be no big changes or effects for its U.S. operations as the current direction of the Bush administration’s economic policy is expected to be maintained.
Samsung Electronics, which has formed a long relationship with the Bush family, expects Bush’s victory to help boost its revenue in the U.S. market. The electronics giant decided to build a semiconductor plant in Austin, Texas, last May, when the senior George Bush attended the investment ceremony to congratulate the company. Samsung chairman Lee Kun-hee is known to have met the senior Bush several times after the investment ceremony.
LG Electronics also perceived Bush’s victory would result in consistency for U.S. economic policy. ``We will aggressively bolster our marketing and sales activities in the U.S. to expand our exports,’’ a company official said.
SK Group, the nation’s third largest business group, anticipated that the international crude oil price would rebound with Bush’s victory, and thus try to stabilize its oil supply through diversifying import sources and actively participating in the development of foreign oil wells.
Dire Prospects
The Samsung Economic Research Institute (SERI) announced negative prospects for the Korean economy with Bush’s win, citing the possible impact of increased market liberalization pressure on trade partners by Washington.
In his report on the implications and influence of the 2004 U.S. presidential election, Jeon Young-jae, a senior research fellow with SERI, predicted that the Bush administration was likely to simultaneously pursue a multilateral trade strategy, pushing both the formation of free trade agreements (FTAs) and multilateral trade negotiations.
``The Bush administration will increase pressure on its trade partners to open their local markets,’’ Jeon predicted.
He added, however, that the U.S. market’s import restrictions would not be tightened significantly over the next several years. Jeon nevertheless projected that the U.S. would continue its double-sided trade policy of pushing for open markets while employing safeguards to protect its domestic industries against foreign imports as witnessed in the past for steel.
Jeon predicted that Bush’s re-election would not have a great influence on either the U.S. or the world economy in the short term.
Nevertheless, he noted that the current high crude oil prices and weak dollar trend are forecast to continue for quite some time, weakening South Korea’s export competitiveness. Oil prices are forecast to remain high due to Bush’s aggressive policy of filling the U.S. Strategic Petroleum Reserve and the possible effects of his re-election in the Middle East.
In addition, Jeon pointed out that U.S. pressure on Korea to raise the value of the Korean currency is expected to increase in the future as South Korea, China and Japan accounted for up to 38 percent of the U.S.’ $422.7 billion cumulative trade deficit between January and August this year.
The report also anticipated a clash in opinions between the Bush administration and the South Korean government regarding the approach for resolving the North Korean nuclear weapons issue because Bush prefers a long-term blockade policy over one favoring early resolution.
sjkim@koreatimes.co.kr
