Page 18 - Zenith2024

Zenith 2024

Reshaping Trade Policies: South

Korea's Path to Supply Chain

Resilience and Sustainability

In recent years, the fragility of global supply chains has emerged as a critical issue for the international
community. Complex factors such as the pandemic, geopolitical tensions, and climate change have
disrupted the established supply chain structures underpinning the global economy. Governments and
businesses worldwide are now exploring multifaceted policies to build stable and sustainable supply
chains. The South Korean government is also aligning with this global trend by implementing trade policy
changes aimed at diversifying supply chains and bolstering domestic manufacturing capabilities.

Strategies for Supply Chain Diversification

South Korea is actively working to reduce its dependency on specific countries by revising the "Special
Act on Materials, Parts, and Equipment" and strengthening policies to diversify the supply chains of key
commodities. To achieve this, the government is diversifying sources for raw materials and components in
critical industries and pursuing risk mitigation through overseas investments and partnerships. Notably,
expanding collaboration with Southeast Asian and Latin American countries is a focal point, particularly in
cutting-edge technology sectors such as semiconductors and batteries.
Additionally, South Korea is leveraging its participation in multilateral economic frameworks like the Indo-
Pacific Economic Framework (IPEF) to deepen supply chain cooperation. The country is also moving to
expand bilateral and multilateral free trade agreements (FTAs) with strategically significant regions to
mitigate global supply chain risks.

Domestic Manufacturing as a Pillar of Policy

Stabilizing supply chains is not confined to international collaboration. The South Korean government
is using this opportunity to strengthen domestic manufacturing capabilities as a foundation for long-
term economic growth. The "K-Smart Manufacturing Innovation Strategy" seeks to enhance productivity
and global competitiveness across the manufacturing sector by promoting digital transformation and the
integration of advanced technologies. This includes government support for smart factory construction, AI
and big data-driven process improvements, and expanded investment in research and development (R&D)
to foster an innovative manufacturing ecosystem.

Furthermore, the government is incentivizing companies to shift production from overseas to domestic
facilities through tax benefits, deregulation, and financial support. Regional cluster development for
advanced industries is also being actively pursued, promising economic revitalization in these areas.

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