NZ Builds Ties With South Korea

Prime Minister Luxon’s visit to the Republic of Korea (South Korea) last week marked a significant step forward in building relations with one of our most important friends in Asia.

The visit, the first by a PM to Korea in nine years, attracted little media attention in New Zealand (only TVNZ travelled with the PM) and most of that was focused on Kiwirail cancelling the contract to buy inter-island ferries from Hyundai Heavy Industries, and a Korean court belatedly convicting a former diplomat for sexual assault in New Zealand in 2017.

Despite the breathless press coverage, neither issue is likely to have a long-term impact on the relationship.  Korean officials consider the ferry issue to be entirely commercial, and the recent court ruling in Korea appears to mark the end of the legal issue .

The main takeaway from the visit is instead that South Korea is emerging quietly but steadily as a major Asian partner for New Zealand.

PM Luxon in talks with ROK President Yoon/ Image X

This is being driven principally by geopolitics – the realization in both Wellington and Seoul that the uncertain and increasingly confrontational US/China relationship makes it critical for both New Zealand and Korea to strengthen friendships with regional partners who share their interests and values.

That common interest was reflected in PM Luxon and President Yoon Suk-yeol agreeing to upgrade the relationship to a ‘Comprehensive Strategic Partnership’ - diplomatic-speak that puts New Zealand on the same level as Australia.  The upgrade requires some further work before it officially takes place (Australia achieved the same status in 2021) and is likely to be the centrepiece of a second visit by Luxon to Korea next year to attend the APEC Leaders’ Meeting. 

Luxon and Yoon opened their joint statement with a declaration of “shared values and aligned strategic vision” including “democracy, the rule of law and human rights, support for strong multilateral and regional organizations and frameworks, and a commitment to peace and prosperity, free and open trade, and sustainable growth”.

This list of priorities is right in line with the ‘Global Pivotal Strategy’ that Yoon has made central to his foreign policy.  Like New Zealand, Korea is highly concerned about the erosion of the rules-based system, as institutions such as the WTO and UN struggle to maintain credibility and relevance amid rivalry between the superpowers.

The most pressing area is security.  While the two leaders repeated conventional statements of concern about North Korea, that issue was lower in their priorities than the broader geopolitical situation.

The PM visits the DMZ between the divided Koreas/Image X

Luxon and Yoon strongly condemned Russia’s war of aggression against Ukraine, and expressed explicit concern about the situation in the Taiwan Strait and the South China Sea.

Both agreed to progress the “Indo-Pacific 4 (IP4)” discussions among New Zealand, Korea, Japan and Australia, the four NATO observers from this part of the world. 

Korea and Japan are keen to see NATO take a closer role in the Indo-Pacific but New Zealand is more cautious.  The statement from Luxon and Yoon closely followed the line run by former PM Ardern, describing the grouping simply as a “forum to exchange views on pressing regional issues”.

Luxon and Yoon also agreed to start a regular bilateral dialogue on “Economic Security”–  buzzwords for protecting international supply chains and strategic goods from interference and domination by China.

There was less progress in the trade area.  New Zealand has a relatively high-quality FTA with Korea, dating from 2015.  That agreement has helped bilateral trade to double during that time, making Korea New Zealand’s 6th largest export partner.  But plenty of unfinished business remains – including tariffs and quotas on New Zealand exports such as milk powder, deer velvet, honey and mussels.

Luxon came away with an agreement to “explore the possibility of an upgrade” of the FTA.  This is a welcome step forward – New Zealand has been seeking an upgrade for several years - but is a very loose commitment, with no specified timeframe or scope and plenty of room for Korea to walk away if it chooses.

More strikingly, despite references to other economic frameworks such as the WTO, APEC and IPEF, the leaders’ statement made no reference at all to CPTPP – which New Zealand has for years been trying to persuade Korea to join.

Korea has been close to joining CPTPP on a couple of occasions, and President Yoon himself made positive references to it during his campaign in 2022.  But uncertainty about US intentions, fear of Japanese dominance, and anxiety from domestic automobile and farmer lobbies have caused officials to retreat.

Korea pushed back against any reference to CPTPP in the joint text.  Given the reality that New Zealand alone is hardly likely to change Korea’s mind, New Zealand gave way. 

Still, if Korea does not join CPTPP it will be a double loss.  New Zealand has little negotiating power vis a vis Korea in bilateral discussions, whereas in CPTPP Korea would be obliged to negotiate with the whole group. 

More importantly, having Korea inside the tent of the CPTPP, the region’s highest quality trade agreement, would provide a significant and much-needed boost to the regional rules framework.

Luxon is keen to see much more Korean investment in New Zealand.  He held two roundtables with potential investors in Seoul, highlighting opportunities in infrastructure, construction and renewable energy.  

While the Korean side reportedly showed interest, it will be some time before we see any concrete outcomes.  

The tech geek in Luxon will have been pleased to see two new issues on the agenda.

Artificial Intelligence (AI) is becoming a major priority for tech-savvy Korea, which is pushing hard to build multilateral rules on the issue.  Yoon sought New Zealand support for a summit being held in Seoul this week called  REAIM (Responsible Artificial Intelligence in the Military Domain). But with New Zealand well behind Korea in both capability and policy thinking on AI, Luxon was unable to go beyond welcoming Korean leadership.

Luxon had more to say on the second new issue - space.  The global success of Rocket Lab has pitched New Zealand into a small and elite group of countries with recognized capability in that area.

Space is a brand-new area for New Zealand diplomacy.  It is showcasing New Zealand's tech capability and helping to modernize our brand in hi-tech markets like Korea where New Zealand is still largely associated with sheep, green fields and nature. 

In 2021 both Korea and New Zealand were invited to join the US-led Artemis space cooperation programme, and New Zealand this month agreed to join the US and others in Operation Olympic Defender.

New Zealand and Korea have a common interest in ensuring activities in space are transparent, open and rules-based.  But as on planet earth itself, it's going to be difficult to separate commerce and politics.

 US references to Operation Olympic Defender are couched largely in terms of protecting US primacy in space - to “deter hostile actors”. 

Luxon and Yoon’s discussions on space policy mirrored their broader discussions on geopolitics on the ground. 

Korea, like New Zealand, is deeply uncomfortable with the erosion of the rules-based order and aggressive actions by Russia and China.  Korea supports the US in seeking to deter bad actors in the region, but it is loathe to go as far as some in  Washington in confronting or  ‘containing’ China’s rise, given Korea’s enormous exposure to the Chinese economy.

On that point, Luxon and Yoon would have found themselves in close agreement.  

Luxon has set a furious pace of international travel this year in getting to know his neighbours.  He would have found few as closely aligned with his approach as President Yoon.    

• the views expressed are those of the author.

Asia Media Centre