From bankers to sociologists, people from different disciplines are flocking to agree that a new world order is coming into being. Lee is fond of saying that Asia is the growth engine of today, and its expected to account for 35% of the worlds GDP within 10 years. IMF expects the continent to grow at almost double the rate forecast for the global economy next year. Over the next two years, South Korea is expected to outpace all but China and India among the worlds 15 largest economies. Admitting that there are challenges aplenty, common sense demands the pursuit of greater regional integration. And after a recent election victory, Japans new Prime Minister has joined the latest in a queue of Asian leaders announcing that he will be seeking to upgrade economic, security and cultural relations with his neighbours in the East.
What India recognises is that the likes of South Korea, China and Japan have a headstart on working in concert. A shared dismay over falling levels of trade and investment from the US and Europe has pushed them to seek out formal structures of collaboration. An alternative to the EU is in the air, and historical differences are being put aside. Japans occupation of the Korean peninsula through the first part of the 20th century has left scars that can make the India-Pakistan narrative look like a fairytale, but the two countries are now considering an undersea tunnel that will put the one connecting the UK to France to shame. Why Because it will bring down the cost of transporting containers from Osaka to Busan.
With reference to such a spirit of regional teamwork, the Comprehensive Economic Partnership Agreement (CEPA) between New Delhi and Seoul that has come into effect this month is definitely a step in the right direction. How serious are both sides about CEPA Signing it was one of the first foreign policy acts of Prime Minister Manmohan Singh after UPA-2 assumed power. On the part of President Lee, this is the first such agreement to have been signed between South Korea and a Bric country. The pact is expected to, on average, boost two-way trade volumes by 15% a year. It reduces South Korean tariffs on 90% of goods from India, while India cuts 85% tariffs on South Korean products. Lets also trace CEPAs name back to the Indian concern that public opinion doesnt favour FTAs on this shore. Not a bad corollary to the corporate sensitivity, pragmatism and customisation that we see in the fact that LG Electronics advertises in a dozen Indian languages. Or in the fact that Hyundai equips its Indian autos with stronger horns and more robust air conditioners because, lets face it, we like to be loud when we feel hot.
Lee has emphasised that CEPA is different from the other FTAs signed by his country because it has a chapter on the exchange of professionals. CEPA gives 163 categories of professionals from India and South Korea greater liberty to work in each others countries. This is noteworthy because an Icrier study suggests that trade in services is increasing rapidly between the two countries, and this is where the future possibilities are strongest. In sectors like IT, this is a reflection of complementarities. The South Koreans are recognised for their electronic and hardware industry while the Indians have proved their mettle in software. As for Indian investments in South Korea, Tata Motors set an important benchmark when it signed an agreement for acquiring Daewoo Commercial Vehicles in Gunsan in 2004. More broadly, South Korea can provide Indian industry an important gateway into the APEC region.
As the boss of Hyundai Construction in his pre-political avatar, Lee was nicknamed Bulldozer. He has been pushing forward his chosen agenda, including a New Asia Diplomacy, with force. Much like the Indian PM staked his political capital on the nuclear deal with the US, Lee recently pegged his reputation on securing a $20-billion contract to build four nuclear reactors in UAE. He won that bet waged against Western contractors, a testimony as much to his grit as to South Koreas ability to deliver nuclear power cheaply. Lee has also made green technology a cornerstone of his presidency. This year, his government will be offering a host of tax incentives, subsidies, credit guarantees and other kinds of support to the likes of hybrid cars and green buildings.
In seeking a partner for expanding its Asian footprint, India really couldnt have asked for someone more suitable.