By Janet L. Yellen
Facilities such as these testify to the dynamism of the Korean economy. The ingenuity and industriousness seen here help explain how Korea has grown to become one of the most productive economies in the world.
That ingenuity is shared by workers and entrepreneurs both in the United States and in Korea. It is what has made our two countries such strong economic partners and close allies over the years.
Our economic partnership continues to grow, including Korean investments in the US: LG recently announced investments in electric car battery plants in Michigan, Ohio, and Tennessee.
Hyundai has similarly announced investments to build electric cars and batteries in Georgia.
While Samsung has announced plans to build a major semiconductor chip factory in Texas. Meanwhile, the United States has bolstered its investments and partnerships with Korea, including:
The ROK-U.S. Global Vaccine Partnership, which included U.S. vaccine makers Pfizer and Cytiva partnering with Korean firms on vaccine production.
And the POSCO and GM partnership, where the two companies are diversifying their supply chain production for battery inputs with factories in Korea, Europe, and Canada.
By deepening our economic ties and making our supply chains more resilient, we’re seeking to resolve the sort of bottlenecks that are raising prices for consumers in both of our countries.
As anyone who has tried to buy a car recently can tell you, global shortages across supply chains are raising prices. Auto companies will tell you about how those same shortages are slowing down production and idling factory lines. And that’s true in far too many sectors of our economy, where challenges in our supply chains are fueling the inflation that Americans are feeling in their day-to-day life.
But by working with key allies like Korea to develop stronger supply chains for key components like EV batteries or semiconductors, we can make both of our economies stronger and help ease the blockages that have led to higher prices and delays for American workers and businesses.
Supply chain resilience is a key focus of the Biden-Harris administration. The necessity of this work has been illustrated clearly by the events of the past two years – first by COVID-19 and our efforts to fight the pandemic, and now by Russia’s brutal war of aggression in Ukraine. Together, they have redrawn the contours of global supply chains and trade.
Economic integration has been weaponized by Russia to great effect. Right now, Russia is threatening to spark a global food crisis by blocking ports in Ukraine, and its invasion of Ukraine has already caused energy prices to rise in America and across the world.
It is clear that no country will be spared from the consequences of Putin’s illegal war of aggression. All responsible countries must unite in opposition to this war and work together to end it swiftly.
That is why the United States and other responsible allies and partners are seeking to reduce Russia’s revenue to wage its war, without causing unnecessary volatility in global energy markets.
We seek to impose a price cap on Russian oil exports. By imposing a price cap on Russian oil exports, we can deny Putin the money he needs to fund his war of choice, while dampening high gas and energy prices we’re seeing around the world.
And at a time in which inflation is unacceptably high in the United States, the price cap is one of the most powerful tools we have to address the high cost of gas. But we cannot do it alone – and will need global partners to work with us.
These recent shocks to the global economy have refocused global attention on the importance of economic resilience and addressing supply chain vulnerabilities. Working with allies and partners through “friend-shoring” is an important element of strengthening economic resilience while sustaining the dynamism and productivity growth that comes with economic integration.
Friend-shoring is about deepening relationships and diversifying our supply chains with a greater number of trusted trading partners to lower risks for our economy and theirs.
In doing so, we can help to insulate both American and Korean households from the price increases and disruptions caused by geopolitical and economic risks and facilitate our businesses’ access to vital inputs and products – from medicine to semiconductors to electric vehicle batteries.
In that sense, we can continue to strengthen the international system we have benefitted from, while also protecting ourselves from the fragilities in global trade networks that we have seen over the last few years.
The Biden-Harris administration has not sat idly under these challenging conditions.
On the domestic side, we are investing in our ports, airports, highways, waterways, and clean energy infrastructure thanks to the historic investments in the Bipartisan Infrastructure Law.
We also are calling on Congress to build on that progress by passing the Bipartisan Innovation Act. This is legislation that will invest in supply chain resiliency, in the R&D and commercialization of new technologies, and in making more semiconductors in the United States.
The failure to make those investments in the past has resulted in bottlenecks throughout the US economy – particularly in the automotive sector – that workers and consumers are paying the price for now.
We recognize that it is neither feasible nor desirable for the United States to address its supply chain vulnerabilities alone.
Even as the United States makes investments to expand domestic production capacity for some critical products, as I mentioned earlier, we must work with allies and partners to secure supplies of critical goods that we will not make in sufficient quantities at home.
We must work with America’s allies and partners to strengthen our collective supply chain resilience, while ensuring that high standards for labor and environmental practices are upheld.
The United States is also pursuing supply chain resilience objectives through international forums such as the new Indo-Pacific Economic Framework, the US-EU Trade and Technology Council, and other regional and bilateral initiatives.
In that regard, the Biden-Harris administration recognizes the critical role that the private sector can play in making supply chains resilient.
The United States has taken steps to work with the private sector and leverage financial and development tools to promote supply chain diversification.
A recent example is the Development Finance Corporation’s announcement of a $500 million loan to support solar panel manufacturing in India.
To make our supply chains more resilient we need to maintain strong economic ties with critical allies like Korea, while lessening the risks associated with the over-concentration of key supplies in unreliable countries.
We do not want a retreat from the world, causing us to forego the benefits it brings to the American people and the markets for our businesses and exports. The efficiencies we gain from strong bilateral ties with friends help drive down prices and support US jobs, workers, and consumers.
By taking a more strategic, long-term view of the vulnerabilities in our economic relationships, we can ensure that the trade we engage in will continue to make our economies more innovative, productive, and resilient.
Of course, economic resilience is not just about trade and investment ties. Russia’s illegal war with Ukraine has also underscored just how vulnerable we are to global energy shocks.
Like the United States, Korea has been hit hard by rising commodity prices, including energy price spikes caused by the war in Ukraine.
Even as we work to expand the supply of oil and gas in the short term to lower prices at the pump in America and around the world, this is a reminder of the importance of accelerating the global transition to clean, renewable sources of energy in the medium to long-term.
Having domestic sources of renewable energy means we won’t be at the whims of authoritarians like Vladimir Putin, even as we lower emissions and energy costs.
It also means at the facilities here – and in the factories I mentioned that are being built across the United States in Michigan, Ohio, Tennessee, Georgia, and Texas – we are building the backbone for the world’s transition to a greener economy and the new green jobs of the future.
In particular, the supply of electric vehicle batteries that LG is helping to secure with their investments in America are vital for these intertwined goals of bolstering manufacturing, lowering energy costs, and reducing emissions.
We must also strive to make the United States and our partners and allies safe from the arbitrary and politically motivated actions that constitute economic coercion.
As Korea knows well, economic integration with certain countries can come with heavy costs. Trade dependencies can give authoritarian regimes leverage to extract concessions and undermine the rules-based international economic order.
They can even put democratic governments – who are accountable to the citizens that elected them – at the mercy of bullying by authoritarian leaders who can subject their citizens to painful economic costs.
Countries across the Indo-Pacific, and throughout the global economy, remain vulnerable to countries using their market positions in raw materials, technology, or products to exercise geopolitical leverage or disrupt markets and trading activities for unrelated reasons.
One such example is China, which has directed significant resources to seek a dominant position in the manufacturing of certain advanced technologies, including semiconductors while employing a range of unfair trade practices to achieve this position.
One of the ways we can address this is by modernizing our approach to trade integration by properly taking into account externalities arising from concentration of supply chains, geopolitical concerns, and value – rather than overly focusing on cost.
To be clear, China has benefited enormously from being part of a global system, a rules-based multilateral system.
We ought to try to preserve the best features of that system – one that has been beneficial to the United States and our allies – while working to address the real problems that have emerged, including the unfair Chinese practices that damage our national-security interests.
In modernizing the multilateral trading system, our objective is to achieve free and secure trade that benefits our workers, businesses, and consumers.
We cannot allow countries like China to use their market position in key raw materials, technologies, or products to disrupt our economy or exercise unwanted geopolitical leverage.
The United States and Korea share a common goal of a free and open Indo-Pacific. But achieving it will take resolute action.
The Biden-Harris Administration has not – and will not – shy away from that responsibility.
The United States and our allies, like Korea, will work together to continue to demand strong adherence to norms and values that have underpinned the international economic order.
We will impose harsh consequences on those countries that abuse or break that order, as we have demonstrated with our unprecedented response to Russia’s aggression.
And we will work with allies and partners through the Indo-Pacific Economic Framework to help lower costs by making our supply chains more resilient in the long term.
To conclude, thank you for the opportunity to see the important and innovative work you do here at LG Science Park.
I want to thank the workers here and in the United States for deepening the long-standing partnership and alliance between the United States and Korea.
The interlinkages that connect us must remain robust against the shocks we have recently experienced.
The Biden-Harris administration will continue to work with our partners and allies to strengthen the vibrancy and resilience of our economic relationships. And I look forward to deepening cooperation with Korea and across the Indo-Pacific going forward.