A Trade War Will Not Resolve The Korean Crisis

On September 3rd, North Korea allegedly tested its most powerful nuclear device to date. The speculation began after a 6.3 magnitude earthquake struck near the Punggye-ri test site in the Northeast region of the country. Shortly after, Korean Central Television announced that the explosion of a hydrogen bomb on Sunday had been “a perfect success!” The true power of the supposed explosion is still unknown, but estimates have it ranging from 50 to 150 kilotons—over three times more powerful than the bomb dropped on Hiroshima in 1945.

Though details of the test remain murky, the international response has been no more decisive. South Korea—the nation most threatened by Pyongyang’s nuclear advances—engaged in a series of live-fire exercises,  with the country’s Defence Ministry announcing it would move forward with the deployment of the controversial Terminal High Altitude Area Defense (THAAD) system. In an emergency Security Council meeting, the Japanese Ambassador to the UN, Koro Bessho, warned that “if they [North Korea] go down this road there will be consequences.” On the other hand, China’s response is comparatively restrained, despite the nuclear test coinciding with Beijing hosting a BRICS summit—a sign that North Korea is looking to test the limits of its neighbour’s cooperation. Although China joined the BRICS nations in condemning the test, its envoy to the UN reiterated the country’s steadfast opposition to a hostile response on the Korean peninsula.

U.S. President Donald Trump also responded to the news of a possible nuclear test in North Korea. On September 3rd, the president tweeted: “The United States is considering, in addition to other options, stopping all trade with any country doing business with North Korea.” Trump’s most recent comments remain in line with previous hardline rhetoric toward the North Koreans. Only one month ago, he threatened to unleash “…fire and fury like the world has never seen…” In addition, Mr. Trump has repeatedly stated that “all options are on the table” with regards to dealing with North Korea. However, Sunday’s comments expanded the target of those options to North Korea’s trading partners, ordering them to stop dealings or face the consequences.

However, similar to Trump’s other grandiose social media statements, this threat should be taken with a grain of salt. Mr. Trump has made the issue of international trade a staple of his image, both on the 2016 campaign trail and in the Oval Office. Opposition to free trade deals—whether that be the criticism of NAFTA and the Trans-Pacific Partnership or America’s negative trade balances with countries as diverse as Canada and Germany—has been one of the few consistent messages emanating from the Trump White House. But if the president’s comments on North Korea are taken seriously, the rhetoric represents a grave threat to global economic stability and international peace.

Mr. Trump’s tweet was almost certainly directed toward China, whom the president has consistently denounced for failing to restrain the Kim regime in Pyongyang. And in many ways, Mr. Trump is correct. For years, Beijing has been content to act as a vital trading partner and protector, despite North Korea’s continual snubbing of international law. But if China enacted trade restrictions against its renegade neighbour, Koreans would feel the effects to a far greater degree than any previous economic sanction. According to the Observatory of Economic Complexity, China represents 83% of North Korea’s exports, and 85% of its imports; to cut off that vital lifeline would almost certainly lead to the collapse of Kim Jong-Un and his cabal of supporters. Such a scenario would cause a massive flood of refugees into neighbouring China, possibly leading to American forces being stationed along the Chinese border in a reunified Korea. Such a disaster would reverse decades of Chinese foreign policy. As such, no matter what Mr. Trump says, it is unlikely for Beijing to take any serious action against its neighbour. And if Trump does not retract these threats, he could drag the United States into a devastating trade war with China.

The dangerous trade-related rhetoric was not limited to threatening China. Just days before North Korea’s alleged nuclear test, the Trump administration pushed forward with its plan to renegotiate KORUS, the U.S-South Korean Free Trade Deal. The president has been highly critical of the deal, which he blames for America’s trade deficit with the East Asian ally, despite a sizable trade surplus in services. However, such a move would be disastrous to American interests and world peace. An attempt to punish South Korea would not only lead to retaliatory tariffs on American goods and businesses but would also divide these allies at a critical moment. A disgruntled Seoul may look to a cut a deal with its northern neighbour if it feels the United States can no longer be trusted as a reliable ally. In that case, Washington would find itself alone in dealing with an emboldened North Korea, only heightening the risk of conflict.

The normative value of trade seems to be lost on President Trump. In his obsession over ‘winners’ and ‘losers’, Mr. Trump misses many of the ancillary benefits of an interconnected trade network among allies and enemies, alike. Trade is an invaluable tool for building and strengthening bonds across national lines, both because it familiarizes countries with one another and makes the cost of conflict much higher—thus, less likely to occur. North Korea’s provocative actions, among other things, are meant to sow dissent between the United States and other regional players. By threatening to punish South Korea, China, or any other nation with a trade dispute, President Trump is playing right into Pyongyang’s hands. In order to maintain a united front in containing a nuclear-armed North Korea, U.S. diplomats must stress a contemplative, multilateral approach, rather than the military and trade war inducing options which seem to be the preference of the Trump administration.

Besides acting as a critical bonding agent between nations, integrating into the global economic order also helps normalize behaviour within countries. Pariah states tend to soften their edge as they begin to experience greater economic prosperity, growth in civil society, and the benefits of collective security. Meanwhile, isolating North Korea from its trade partners is a recipe for a destabilized regime in Pyongyang. To avoid a scenario where North Korea feels it must strike before it is too late, American diplomacy must re-amp its commitment to international trade, rather than try to weaponize it. In the coming weeks and months, the United States must work to ensure stability above all else. This means dropping the dangerous rhetoric of trade wars and incorporating as many international partners as possible in a dialogue with Pyongyang. Although many in Washington may believe that the Kim regime will only respond to the stick rather than the carrot, it seems abundantly clear that the former option—be it trade embargoes or military strikes—is likely to make the situation worse. As of yet, the Trump administration seems to be following the aphorism that “if the only tool you have is a hammer, treat everything as if it were a nail.” In dealing with North Korea, it is time for Washington find itself a new toolbox.

Geordie Jeakins
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