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CRITICAL ISSUES FOR THE REPUBLIC OF KOREA

by The Honorable Duwan Pong

Recently, Korea has attracted a lot of attention in the

international community, especially for its economic success. Korea, the seventh largest trading partner of the U.S., serves as a shining example of a free market economy for the world's developing nations.

The large economic gap that now exists between South and North Korea

clearly demonstrates the advantages of a free market economy as the

communist-run economy of the North falls farther and farther behind

each year. For example, South Korea's per capita gross national

product last year stood at $2,032 while that of North Korea reached

only a meager $765.

In trying to develop a more viable market economy, not long after

the birth of the Fifth Republic in 1980, Korea began to implement a

T he Honorable Duwan Pong is a member of the National Assembly of the Republic of Korea. His electoral district is located in the heart of Seoul, Korea's capital. Since his election in 1981, he has served as the official spokesman for the ruling Democratic Justice Party and as Special Envoy to the Korean President. He is currently Chairman of the Assembly's Foreign Affairs Committee. Chairman Pong began his professional career as a journalist, working first as a newspaper reporter and later as an anchorman for one of Korea's national TV networks.

He spoke at The Heritage Foundation on January 30, 1987.

ISSN 0272-1155. Copyright 1987 by The Heritage Foundation.

phased market-opening scheme. As a result, we have already

liberalized importation of 91.5 percent of standard trade items--up

some 23 percent from a low 68 percent in 1980. By 1988, virtually

every import item will be admitted with-no requirements for specific

government approval.

Despite such efforts, Korea has often been accused of limited

market access for foreign products. In fact, a lion's share of the

newly created Korean markets for foreign products has been captured by

Japan, with which Korea ran a serious $5.4 billion trade deficit

during 1986 alone. I may note, in this connection, that we are trying

our utmost to encourage Korean buyers to switch their import sources

from Japan to the U.S.

As our economy expands further, trade frictions with our trading

partners will naturally arise. But we will continue to implement

economic policies that are beneficial for us as well as our trading

partners.

With regard,to certain pending trade bills in the U.S.

Congress--characterized as "protectionist" bills by some--I would like

to point out that, if passed into law, these schemes will inevitably

lead the U.S. and many other countries involved into a serious

economic recession.

This is so because protectionist bills invite similar

countermeasures from other countries. once this vicious circle

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starts, the most likely victim will be free international trade, which

so far has been the single most important factor contributing to

economic growth. With slowed economic growth followed by recession, I

believe the worldwill be-menaced-with instabil.ity-T---!the kind of

instability which was the very cause of two world wars in the past.

The rapid economic progress and social transformation which have

taken place in Korea naturally have given rise to desires for

increased democratic development and for a political system that can

accommodate those desires.

A major step taken in this regard was the adoption of a

single-term presidency in the Fifth Republic's constitution. In fact,

President Chun Doo Hwan himself has pledged that he will step down

from office in 1988 and no one, including members of the opposition,

doubts this. By achieving the first-ever peaceful transfer of power,

Korea will take a major step forward in its political development.

A more recent measure taken by President Chun Doo Hwan and the

ruling Democratic Justice Party was the decision to draft a new

constitution in accordance with the wishes of the people. In order to

accommodate the desire of the people for change and also to best serve

the needs of a pluralistic society, the Democratic Justice Party has

proposed a cabinet system of government. Many difficulties lie ahead,

given the short period of time left for negotiations with the

opposition, but I am confident that compromise can be achieved and

that our draft of the new-constitution will be accepted in the end.

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Korea's economic prosperity and social stability are of key

importance in the Korea-U.S. relationship, not only for Korea's

continued viability as an economic partner of the U.S., but also for

the security which both countries have worked so hard to protect.

For reasons of history and geopolitics, Korea constitutes a

crucial linchpin in the security of Northeast Asia and for the Pacific

basin as a whole. For forty years now, the Republic of Korea and the

U.S. have shared a special bond, a bond that is strengthened by the

knowledge that each plays a vital role in the other's security and

prosperity.

What worries me, however, is the widening economic gap between

South and North Korea. The prospect that the South will receive

international prestige from holding the 1988 Olympics makes North

Korea anxious. We are all aware of the close military alliance the

North Koreans are forming with the Soviets and of the recent North

Korean arms build-up along the demilitarized zone (DMZ). Furthermore,

North Korea recently began construction of a massive dam just north of

the DMZ on the Kumgangsan River, a major waterway which flows south

toward Seoul. We fear that the North Koreans will use the dam as a

weapon by triggering massive flooding in South Korea.

These next few years will be a critical period in Korean history,

with many political and economic milestones to be reached as well as

problems to be solved. The Republic of Korea recognizes its

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responsibilities to preserve the security of the nation and to

accommodate various desires of its people--not excluding the ardent

desire for the reunification of the country in a peaceful manner.

Korea also recognizes its responsibilities as-an-important member of

the world community. I sincerely hope that you will continue to

support and encourage us in our endeavors to fulfill these

responsibilities.

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