“Environment, Digital, Labor” Emerge as Three Major Issues after COVID-19

- KITA announced TOP 7 trade issues of next year... Green New Trade, Digital Trade Mini Deals are expected -

While COVID-19 continues to spread, it is forecast that the trade focus will shift from the traditional trade agenda centered on market opening to the environment, digital, and labor sectors next year.

The Korea International Trade Association (Chairman: Kim Young-ju) issued “2020-2021 Top 7 Trade Issues Selected by KITA” on November 23^rd and selected ▲ the emergence of a Green New Trade, ▲ the full-fledged digital trade war, ▲ the rise of a mini deals, led by ▲ the three key focus of trade, including security, labor, and human rights issues, ▲ prolonged disputes between the US and China, ▲ stronger protectionist measures due to COVID-19, and ▲ the uncertain future of the World Trade Organization (WTO) as 2021 top 7 trade issues.

The report said, “With the spread of COVID-19 and the launch of the Biden administration, which values the environment, the changes in the global trade environment will be accelerated,” and added, “As the seriousness of climate change and the importance of environmental protection have emerged due to the spread of infectious diseases, the establishment of digital trade norms has become urgent as the environment and trade are linked and accelerating the development of the digital industry.” It also stated, “The conflict between the United States and China, which has deepened since the outbreak of COVID-19, extends from security to labor and human rights, and the European Union (EU) also emphasizes labor and human rights provisions when signing a trade agreement.”

Indeed, the EU, which announced its Green Deal policy at the end of 2019, is planning to legislate a Carbon Border Adjustment (CBA) mechanism in the first half of next year. The US President-elect Biden is expected to rejoin the Paris Agreement with the inauguration of the President in January next year and establish environmental policies in earnest. If the environmental policies promoted by the EU and the US affect trade, the possibility of trade conflicts between developed and developing countries cannot be ruled out.

In addition, in the process of establishing digital trade standards, power struggle between the United States, EU, and China is expected to intensify, and digital trade agreements in the form of mini-deal limited to the digital industry are forecast to increase. Currently, Korea is negotiating with Singapore to sign a digital partnership agreement.

The report continued, “Biden's new administration of the United States will remain tough on China, including Section 301 tariffs on Chinese goods and export control,” and added, “In particular, conflicts over implementation of the China-US phase-1 trade agreement and the initiation of phase-2 negotiations including structural reform of China, environmental and human rights issues are expected to intensify.” It also anticipated that "The Biden administration's trade policy to restore a rule-based international trade order will have an impact on WTO reforms such as the appointment of a new WTO secretary general and reconstruction of the appeals body."

President Choi Yong-min of the Institute for International Trade of the Korea International Trade Association said, “Since the environmental, digital, and labor sectors are forecast to become trade issues, it is necessary for the Korean government and industries to check the expected issues in advance and establish our stance by working together,” and added, “In order to cope with the prolonged US-China dispute, Korean companies need to examine supply chains and build a risk management system. Also, since the New Southern region, which is emerging as a substitute for China, has recently shown a trend of strengthening import regulations, Korean companies should thoroughly review the trends when expanding into the markets in the region.”