Korea: New Frontiers in the Asia-Latin America Relationship

Date
Oct 2017
Trade between Korea and Latin America and the Caribbean (LAC) experienced an unprecedented boom beginning in the early 2000s. Following the broader course of Asia-LAC relations, this trade surge was driven by strong resource complementarity between the two economies and fast growth in Asia, which led to a commodities-for-manufacturing trade pattern typical of the region’s trade with Asia. At the same time, the Korea-LAC relationship distinguishes itself from the overall Asia-LAC pattern in several important respects. First, the region’s exports to Korea have included a higher share of manufacturing products and are more diversified overall than is the case with China or Japan. In addition, the trade surge of the early 2000s was followed by a strong inflow of Korean FDI in LAC, which has overwhelmingly targeted manufacturing sectors, helping to further diversify the relationship. Finally, Korea has established an extensive network of free-trade agreements (FTAs) in the region, beginning with the first Asia-LAC FTA with Chile in 2004, alongside a robust cooperation agenda in diverse policy areas. Investment and cooperation thus helps further diversify the economic relationship beyond the commodities-for-manufacturing pattern of trade. This document reviews the evolution of Korea-LAC economic ties since the early 2000s, highlighting how the relationship stands out from the broader Asia-LAC story and identifying the key challenges to strengthen the relationship moving forward.