President Lee Jae-myung and Brazilian President Luiz Inácio Lula da Silva held a summit at Cheong Wa Dae on the 23rd and agreed to elevate bilateral relations to a strategic partnership. At the meeting, President Lee stated, "We will expand bilateral cooperation across a broad range of areas, from critical minerals, environment, and space industry to culture and small and medium-sized enterprises." President Lula responded by mentioning rare earth elements and expressing his intention to actively seek cooperation with Korean companies. The two governments signed 10 memorandums of understanding (MOUs) that day. They also concluded a trade and production integration agreement on critical minerals, kickstarting a Korea-Brazil "rare earth alliance."
Brazil is the world's 10th largest country by gross domestic product (GDP). It also has a massive domestic market with a population of approximately 210 million, ranking 7th in the world. It is one of the top three countries in rare earth reserves and the 9th largest oil producer. However, Brazil accounts for only about 1% of Korea's annual foreign trade, ranking in the 20s. This is the result of our government and companies focusing on the U.S. and Chinese markets while relatively neglecting emerging markets. After Xi Jinping first came to power in 2012, China preempted developing country markets with its Belt and Road Initiative. Japan has also actively engaged in official development assistance (ODA) and infrastructure investment, while we have been slow to follow.
Building on this strategic cooperation with Brazil, we must further expand our advancement into the Global South (approximately 130 emerging countries in the Southern Hemisphere). For our economy to grow stably, we need to reduce trade dependence on the U.S. and China—which are erecting high market barriers amid their hegemonic rivalry—and diversify our export markets.
The government should identify emerging countries that can serve as bridgeheads in terms of global supply chains and concentrate diplomatic and trade capabilities on them. There is also a need to newly formulate everything from ODA and loan allocation to economic and security strategies targeting the Global South. For Korean companies seeking to enter these markets, the government must significantly expand export financing, trade guarantees, tax support, and emerging market information services to reduce financial and institutional risks. Furthermore, if we can further develop existing bilateral and multilateral free trade agreements (FTAs) with emerging countries, our diplomatic horizons can be broadened even further.