[Editorial] Shifting trade rules

Korea Herald

a day ago

Decline of WTO ushers in bilateral leverage, challenging Korea's export-driven economy
A quiet yet drastic shift is underway: After three decades of World Trade Organization-led multilateralism, the United States has openly declared the system unsustainable. Writing in the New York Times on Thursday, US Trade Representative Jamieson Greer portrayed the WTO as a faltering institution that compromised American industry while enabling China's state-driven economic model to thrive.
This is why the world is now witnessing the so-called 'Trump Round,' a new global trade order built not on consensus but on tariffs and bilateral leverage.
In Washington's narrative, the multilateral model was naive: It presumed all members would abide by rules they helped to write. Instead, a system meant to bind China into fair competition allowed it to expand market share through subsidies, export controls and opaque regulation.
Years of dispute-settlement paralysis left the WTO without a functioning appellate mechanism, further eroding credibility. What has replaced it is a model of direct bargaining, with tariffs deployed both as penalty and negotiating instrument.
This has significant implications for South Korea. Its post-1995 export success was built on WTO access guarantees and predictable dispute resolution. Now the playing field is tilting toward power-based negotiation. Under the emerging bilateral terms with the US, Korean exports face a 15 percent tariff, offset partly by market-access pledges in other sectors and by Korean commitments to invest in US infrastructure and advanced industries.
This is not a symmetrical arrangement. Washington controls the main 'carrot' — access to the largest consumer market in the world — and the principal 'stick' of targeted tariffs. The absence of binding multilateral enforcement means concessions will depend less on legal rulings and more on political calculation in both capitals.
South Korea's first task in this environment is strategic clarity. It cannot treat US market access as a permanent right; it is now a conditional privilege. Securing continued access will require not only diplomacy in Washington but a clear sense of the trade-offs that domestic industry can accept.
The second task is diversification. WTO's decline removes the institutional ballast that once made trade with China, the EU and Southeast Asia relatively predictable. Seoul must deepen ties with the Association of Southeast Asian Nations and the EU, accelerate talks for joining a major Asia-Pacific free trade agreement known as the CPTPP, and pursue sector-specific agreements that spread risk. The aim is not to decouple from the US but to avoid being trapped in a single-track export dependence.
Third, Korea must adapt its industrial strategy. Semiconductors remain its core export, but the risk profile has changed. In a rules-light order, sectors less exposed to punitive tariffs — such as green technologies, biotechnology and digital services — will be vital hedges. Industrial policy should now focus as much on resilience as on speed of growth.
Lastly, Seoul should not surrender the principle of rules altogether. Even in a fragmented system, there is room for 'mini-lateral' or regional frameworks that preserve predictable norms. CPTPP accession, deeper engagement with the Regional Comprehensive Economic Partnership, and targeted high-standards pacts could help anchor at least part of South Korea's trade in enforceable obligations.
The end of the WTO era is not the end of trade. It is the end of a certain kind of trade — one where a medium-sized economy like South Korea could rely on codified rules and impartial arbitration to protect market access. The new model prizes leverage, and those without it must find substitutes in alliances, diversification and innovation.
The quiet demise of the WTO should be seen not as a collapse but as a strategic pivot. South Korea's track record of adaptation — from rapid industrialization to digital innovation — demonstrates its resilience amid profound change. The critical question now is whether it can convert this loss of certainty into a competitive edge before others seize the opportunity to define the new rules unilaterally.