DOMESTIC BENEFITS FROM IPEF

[Anchor Lead]

The IPEF, which was launched on Monday, seeks to set new standards for the supply chain, carbon reduction and labor issues. Korean businesses struggling to solve supply chain problems are expected to benefit from the initiative. However, the government and the relevant sectors could face resistance from China.

[Pkg]

Russia's invasion of Ukraine has triggered severe supply chain problems around the globe. In just a year, price of neon has surged by 22-fold, while price of nickel has doubled. As a result, Korean manufacturers of semiconductors and secondary batteries, which are made of neon and nickel, have been hit hard. Korea is particularly vulnerable to supply chain disruptions because it relies heavily on the imports of intermediate materials. The government hopes that by joining the Indo-Pacific Economic Framework, it will be able to cope with the supply chain crisis more effectively.

[Soundbite] Yoon Suk-yeol(President) : "International collaboration is essential for responding to global supply chain issues effectively."

A prevailing view is that technological partnerships among countries will help the semiconductor and battery sectors bolster their competitiveness. The IPEF will also pave the way for early participation in relatively new areas such as digital economy and clean energy.

[Soundbite] Park Seon-min(Korea International Trade Association) : "Digital and environmental issues are inevitable now. Korea will benefit from joining the initiative early on to secure a spot."

However, China's response is a concern, both for the government and the business community. Korea's reliance on Chinese imports of intermediate materials has surged in the past decade, reaching almost 30 percent. Another factor to take into consideration is the possibility of limited actual benefits compared to existing economic deals centered on customs benefits.