🚨 APEC Declaration Removes 'Free Trade'
Today Korean Economic News for Beginners | 2025.11.03
0️⃣ US Protectionism Signals Retreat of Multilateral Trade System
📌 WTO and Free Trade Missing from Leaders' Declaration, Though Ministers Confirmed It
💬 The 'Gyeongju Declaration' from the APEC Leaders' Meeting completely removed all mentions of free trade and the WTO. While foreign affairs and trade ministers from 21 member countries confirmed the importance of multilateral free trade and the WTO in a joint statement, the leaders' declaration did not include this content. This is seen as a result of US protectionist policies and signals a weakening of the global multilateral trade system. Korea now faces the challenge of finding new growth drivers centered on AI and advanced industries amid these changes.
1️⃣ Easy Understanding
The era when many countries worked together to make and follow trade rules is getting weaker. The removal of the key term 'free trade' from the APEC Gyeongju Leaders' Meeting means the "let's work together" atmosphere is fading.
First, let me explain what APEC is. APEC stands for 'Asia-Pacific Economic Cooperation.' It's an economic cooperation group with 21 countries including Korea, the US, China, and Japan. Every year, member countries meet to discuss trade, investment, and economic cooperation, then release a joint declaration.
In the past, APEC declarations always included phrases like 'free trade' and 'support for the WTO (World Trade Organization).' This was a promise to "lower tariff barriers between countries and let goods and services move freely." It's like local merchants gathering and promising to "cooperate with each other and trade fairly."
But at this year's APEC Leaders' Meeting in Gyeongju, these phrases completely disappeared. The interesting thing is that foreign affairs and trade ministers confirmed the importance of free trade and the WTO at their meeting. However, this content was not included in the final leaders' declaration.
Why did this happen? The biggest reason is the change in the US position. Recently, the US has been strongly promoting 'America First' policies. This means "we will protect our country's industries and jobs first." For example, the US charges high tariffs on Chinese products and pressures its companies to produce inside the US.
This protectionism conflicts with free trade principles. Free trade says "let's reduce tariffs and regulations so all countries can compete fairly," while protectionism says "let's make rules that favor our country."
Let me use a company example. In the past, team members gathered and said "let's set goals together and cooperate with each other." But suddenly, the strong team member declares "from now on, everyone do your own thing. I'll do things my way." Other team members might be confused, but because the strong member has big influence, the whole atmosphere changes.
What does this change mean for Korea? Korea has an export-centered economy. It has made money by selling semiconductors, cars, and chemical products to other countries. If the free trade system weakens, each country may strengthen import regulations to protect their own industries, which could negatively affect Korean companies' exports.
So the Korean government needs to find new strategies. At this meeting, Korea received a promise from Nvidia to provide 260,000 high-performance GPUs for AI. This shows Korea's will to find new growth drivers in AI and advanced technology fields.
In the end, the changes in the Gyeongju Declaration signal that the global trade environment is shifting from an 'era of cooperation' to an 'era of competition.' Korea also faces the challenge of building its own competitiveness to match these changes.
2️⃣ Economic Terms
📕 Free Trade
Free trade is a trade method where countries reduce or eliminate tariffs and import/export regulations, allowing goods and services to move freely.
- It's based on the economic principle that overall efficiency increases when each country focuses on products it can make well.
- The removal of 'free trade' from the Gyeongju Declaration is seen as a sign of weakening multilateral trade systems.
- Weakening free trade can negatively affect export-focused countries like Korea.
📕 Multilateral Trade System
A multilateral trade system is a structure where three or more countries participate together to create and follow trade rules and systems.
- The WTO (World Trade Organization) has been leading the multilateral trade system.
- Because all member countries follow the same rules, even small countries can trade fairly.
- Recently, major powers have been prioritizing their own interests, weakening the multilateral trade system.
📕 Protectionism (America First)
Protectionism means when a country puts its own interests first and strengthens its own rules rather than international cooperation or multilateral norms.
- The Trump administration's 'America First' policy is a typical example.
- It appears as imposing high tariffs or strengthening import regulations to protect domestic industries.
- The removal of free trade mentions from the Gyeongju Declaration is also analyzed as influenced by US protectionism.
📕 WTO (World Trade Organization)
The WTO is an international organization that creates international trade rules and mediates disputes, with 164 member countries.
- It was established in 1995 and has promoted free trade and fair competition.
- When trade disputes occur between member countries, it mediates and suggests solutions.
- Recently, major countries like the US have been trying to weaken the WTO's authority.
3️⃣ Principles and Economic Outlook
✅ Rising Trade Costs from Weakening Multilateralism
When countries strengthen regulations individually instead of cooperating, trade costs can increase significantly.
First, higher tariff barriers increase product prices. For example, if the US imposes a 25% tariff on Chinese products, Chinese companies have no choice but to raise prices, and eventually US consumers pay more. Korean companies could face similar situations. If Europe imposes high tariffs on Korean cars, Hyundai and Kia's European exports would be hurt.
Second, uncertainty in trade rules increases. In the past, following WTO rules made trade predictable. But if each country starts changing rules as they please, companies find it hard to make long-term investment plans. For example, if Samsung Electronics plans to build a semiconductor factory in the US, but suddenly the US changes import regulations, the entire investment plan could be shaken.
Third, smaller countries suffer more damage. In the multilateral trade system, even small countries could check powerful nations using WTO rules. But in the era of protectionism, power logic works. Korea will increasingly face difficult choices between powerful nations like the US and China.
The weakening of the multilateral trade system can increase overall trade costs and uncertainty, slowing global economic growth.
✅ Growing Need for Industrial Structure Transformation
When free trade weakens, domestic companies feel great pressure on supply chains they depended on from foreign countries.
First, self-reliance in key parts and technology becomes important. During the COVID-19 pandemic, we experienced the risk of depending on foreign countries for essentials like masks and vaccines. Similarly, we need to increase self-reliance in key industries like semiconductors and batteries. Korea's securing of 260,000 GPUs from Nvidia at this APEC meeting is part of efforts toward AI technology self-reliance.
Second, we need to find new growth drivers. Depending only on traditional manufacturing exports makes us vulnerable to protectionist measures by each country. Instead, we need to build competitiveness in advanced industries like AI, bio, and aerospace. Especially AI is a key technology that will change all industries, so government and companies need to expand investment together.
Third, nurturing small and medium enterprises and startups is necessary. An export structure centered on large companies is vulnerable to changes in the global trade environment. If various small and medium enterprises and startups develop innovative products and services, the overall economy's resilience increases. The government should help them through deregulation and financial support.
Upgrading and diversifying industrial structure is an essential strategy to survive in the era of protectionism.
✅ Increased Trade Diplomacy Risks and Response Strategies
When international trade norms shake, unexpected trade conflicts can increase.
First, Korea's choice becomes more difficult amid US-China conflict. The US pressures allies to choose "are you on our side or China's side" to check China. But Korea depends heavily on the US for security and on China for economy, making it hard to choose one side. This tension was revealed at this APEC meeting too, where China emphasized multilateral trade while the US prioritized its own interests.
Second, bilateral negotiations become more important. When the multilateral system weakens, each country tries to solve problems through one-on-one negotiations. Korea also needs to maintain close cooperative relationships individually with the US, China, Europe, and Japan. For example, we need to utilize the Korea-US FTA well, strengthen Korea-China economic cooperation, and solidify relations with the EU.
Third, economic security has emerged as a new topic. In the past, trade was purely for economic benefit, but now it's directly connected to security. Securing stable supply chains for key resources like semiconductors, batteries, and rare earths has become important at the national security level. The Korean government also needs to systematically establish strategies for supply chain stabilization.
As trade diplomacy complexity increases, the government's strategic response capability becomes even more important.
4️⃣ In Conclusion
The removal of 'free trade' and 'WTO' mentions from the APEC Gyeongju Declaration is a symbolic event showing the weakening of the global multilateral trade system. This is not just deletion of terms, but means fundamental changes in the international economic order.
For decades, the world economy grew based on free trade and multilateralism. International organizations like the WTO made rules, and each country followed those rules and competed fairly. Thanks to this system, export-focused countries like Korea could grow rapidly.
But now that era is ending. As the US and other powerful nations prioritize their own interests, power logic is starting to work rather than multilateral cooperation. The fact that ministers' meetings confirmed the importance of free trade but it wasn't reflected in the leaders' declaration shows a dual attitude of talking about cooperation on the surface but actually pursuing their own interests.
These changes are a big challenge for Korea. Korea's trade-dependent economy could be directly hit by the weakening free trade system. If countries raise protectionist barriers, the competitiveness of major export companies like Samsung, Hyundai, and LG could weaken.
But crisis is also opportunity. As seen in receiving a promise of 260,000 AI GPUs from Nvidia at this meeting, Korea can find new growth drivers in advanced technology fields. If we build competitiveness in future industries like AI, semiconductors, and batteries, we can survive even in the era of protectionism.
The government needs to pursue several strategies simultaneously. First, increase self-reliance in key industries. Second, build close cooperative relationships individually with major countries like the US, China, and Europe. Third, diversify the economic structure by nurturing small and medium enterprises and startups.
Companies also need to adapt to changes. The era of simply mass-producing cheap products for export is over. We need to compete with high-value-added products and differentiated technology. Also, don't depend too much on specific markets or products, but diversify portfolios.
In the end, the changes in the Gyeongju Declaration signal that the Korean economy must transition from an 'era of cooperation' to an 'era of competition and self-reliance.' We should not see this change only as a crisis, but as an opportunity to upgrade industrial structure and strengthen competitiveness.
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