• Book Project

TRADE WARS & CURRENCY CONFLICT: China, Japan, and South Korea’s Responses to U.S. Protectionism, 1971-2013

My book project seeks to explain the similarities and the divergence of the three cases of Northeast Asian trade wars and currency conflicts against the United States. Why did countries that face the same patterns of political pressures – trade disputes and currency appreciation – react differently? The dissertation unravels this question via the cases of Japan, South Korea, and China from 1971 to 2013, and argues that the divergence in the reactions by the countries can be explained by the varying political systems and bureaucratic decision making structures with regard to foreign economic policy and monetary policy making of each country.

Introduction: Defining Trade Wars and Currency Conflicts
Theoretical Framework: Political Capacity and Industrial Interests
Trade Wars: East Asian Responses to U.S. Protectionist Actions, 1971-2013
Trade Wars Continued: East Asian Responses to U.S. Protectionist Actions in the WTO, 1995-2013
Currency Conflict: East Asian Responses to U.S. Currency Appreciation Pressures, 1971-2013
The Change of Tides: The Future of U.S.-Northeast Asian Trade Wars and Currency Conflicts

1   Motivation for Research

Why are bilateral trade and currency conflicts waged, and how are they different from one another? For decades, countries that seem to have the most vibrant, active, and strategic partnerships and economic relationships have developed conflictual trade and currency relations, which led to suing each other on trade issues in domestic courts and international disputes or confronting each other over their exchange rate policies. We have learned over the years through prior cases that bilateral trade deficits are the main cause of U.S. protectionism. Previously, the U.S. has had significant trade and currency conflicts with Japan and South Korea; now, the U.S. is engaged in high-stakes confrontation with China. Unlike resource-rich countries like Saudi Arabia, agricultural-affluent economies like France, and services-oriented economies like Switzerland, these countries have something in common: they are export-oriented economies that excel in manufacturing that have faced severe U.S. protectionist measures.

But due to the differing political capacity and strategic industrial interests of trading partners, the responses to U.S. protectionism have not been uniform. I compare three U.S. trade and currency conflicts with export-led economies of Northeast Asia – China, Japan, and South Korea in the past four decades in chronological order: U.S.-Japan (1970s-80s), U.S.-South Korea (1980s-90s), and U.S.-China (2000s-10s), with two critical junctures of the Asian Financial Crisis (1997-98) and the Global Financial Crisis (2008-11) in consideration. I provide an answer as to why, time and again, U.S. protectionism has recurred in the age of free trade and liberalization, and why countries have responded differently. The ultimate goal of this comparison is to derive policy implications as to whether a single protectionist strategy fits for all trading partners, and to assess whether a consistent policy of protectionism is beneficial for the United States.

1.1 Trade Wars

For many observers in the U.S., each new trade and currency confrontation with an East Asian trading partner can create a sense of déjà vu. From the U.S. perspective, they may look the same because they were born out of trade deficits, but the severity of the deficits differ significantly in terms of scale of bilateral trade and deficit, composition of trade, and dynamics of conflict. But blinded by these aforementioned apparent factors, we fail to recognize that trade wars are inherently different owing to the varied policy responses upon U.S. coercion. In the case of Japan, South Korea, and China, the three countries have responded at various times by acquiescing, reciprocating, and retaliating to U.S. trade dispute initiation. Simply put, trade imbalances matters to the U.S. in general, but the same protectionist measures may not harvest the same outcomes due to the varieties of political circumstances and industrial interests. Analyzing this variation, both over time periods and across countries, can contribute not only to our academic understanding of the dynamics of trade and currency conflicts, but will also contribute policy-relevant lessons that may reduce the contentiousness of future confrontations.

1.2 Currency Conflict

In addition, I address why the three countries have responded differently to currency conflict. I first unravel how trade and finance are intertwined in policymaking. For years, U.S. bilateral trade deficits with East Asian economies have led to political pressure for currency appreciation, as bilateral trade deficits have been presented as evidence of undervaluation of currencies. These pressures have been particularly prevalent on countries that have maintained currency controls and that have had highly-regulated domestic financial systems. In the case of Japan and South Korea, they involved occasionally coercive negotiations to promote financial liberalization and deregulation. Japan acquiesced with its own benefits in mind, and South Korea also acquiesced somewhat but failed to be strategic in its policy making. Today, China faces and resists the same pressures, but China has different answers and motivations. As in the case of trade wars, the crux and objective of the research is in unraveling how differently each country has responded to the currency debates by the changes in their exchange rate policies upon the push for financial opening.

2 Methodology and Data


My hypothesis suggests that the structures of policy formation ultimately leads to the final outcome of policy responses against U.S. protectionism is the cause of the divergence. I hypothesize that it is political capacity that decides the variance in the policy responses to U.S. protectionism. In explaining the varieties of the policy responses, I provide a country-by-country analysis for the three countries based on the five stages in chronological order (Stage 1: mutual economic and security interests; Stage 2: mutual market interests; Stage 3: U.S. protectionism via trade wars and currency disputes; Stage 4: country responses, and Stage 5: beyond the WTO). I analyze political systems, ministries and decision-making structures, bureaucratic performance (by ministries and officials), and industrial interests. The subsequent chapters are organized by important themes subcategorized by each country analysis and comparison.

I have deployed in-depth field research and formal work in my methodology, but the project is in large part qualitative work involving economic data and figures. Chapter 3 is the sole quantitative part in which I present the results from my cross-sectional panel data analysis on the impact of U.S. trade imbalances on WTO dispute initiation.


I make use of two types of systematic comparisons to analyze the causality of the argument. First, in reference to John Stuart Mill’s method of difference, I conduct an atemporal national comparison to analyze differences across three countries. In a big picture, the three countries of study are countries that have commonalities in economic development via export oriented growth, with similar cycles of U.S. protectionism imposed on them, but they diverge greatly in terms of political capacity.

Second, to prove for the significance of trade deficits that propels political action toward protectionism in the U.S. government, I conduct a large-N analysis of U.S. trade imbalances and initiation of trade disputes (Chapter 3). Statistical modeling is presented using quantitative data from the U.S. Bureau of Economic Analysis, U.S. Census Bureau, the WTO, the IMF, the OECD, and the World Bank, centering on the top 30 countries that have run surpluses in trade with the U.S. and/or have been involved in a trade dispute with the U.S. Beyond quantitative coursework at Boston University, I have benefitted greatly from attending lectures on econometrics and statistical analysis at the Department of Economics at the University of Tokyo and also from the ICPSR program at the University of Michigan (Read about ‘The ICPSR Experience’ here).

In all three country case studies, I rely upon three main sources of data: first, interviews with key political actors (politicians, bureaucrats, business representatives, financial leaders); economic and financial data issued by the four governments involved in the study (U.S., Japan, South Korea, China); and official reports issued by international economic research institutions, newspaper articles, written articles and speeches, and local literature from national archives. I have perused WTO and USITC/USDOC data and case reports for detailed quantitative analyses, and data produced by government agencies of Japan (MOF, METI, MOFA, BOJ), South Korea (MOSF, MOTIE, MOFA, BOK), and China (MOF, MOC, MOFA, PBOC). Lastly, some recent data the Trilateral Cooperation Secretariat were used for the analysis of intra-regional trade dynamics (Chapter 7).

3  Language Training 

I first picked up Chinese as an undergraduate student (2002) and later Japanese as a graduate student (2005) at Korea University. I expanded in-depth views on East Asian non-traditional security issues by working for the Council for Security Cooperation in the Asia Pacific (CSCAP) in Seoul, Korea (2006-07). My understanding of the Northeast Asian cultures and my command of Northeast Asian languages have been a great foundation for my work, and I strive to maintain my language skills everyday. My background and language training have given me the tools to work comparatively across different national settings, while also integrating insights derived from more formal tools such as statistical analysis. Apart from my fluency in English, Korean, and French, my proficiency in the other Northeast Asian languages (Chinese and Japanese) has been of fundamental importance and sustaining tool in advancing my dissertation project.

4  Preliminary Research (2008-09)

During my preliminary research in Boston and Cambridge, the discussion on global imbalances emerged prior to the Global Financial Crisis of 2008-2009. I developed a keen interest on the three bilateral trade imbalances and currency wars – specifically, U.S.-Japan, U.S.-South Korea, and U.S.-China trade imbalances, with the academic query in mind that existing work on trade imbalances has provided limited insight on its impact on U.S. foreign economic policy decision-making. I sought to propose a theoretical framework that explains variations in state behavior in international institutions according to the level of trade imbalances that lead to domestic political pressures. I hypothesized that elevation in trade imbalance levels lead to domestic demands on U.S. policy makers to resolve the trade imbalance by resorting to a trade dispute in international institutions, and pressuring its trading partners for currency appreciation. To test my propositions, I constructed a dissertation research plan comprising of a quantitative analysis of trade imbalance impact on disputes settlement cases and qualitative case study evidence finding from the three important bilateral imbalances of study. Prior to on-site dissertation fieldwork, I finalized my preliminary dissertation research under the title, Trade Imbalances and the Future of Northeast Asia’ at the Frederick S. Pardee Center for the Study of the Longer Range Future at Boston University as a 2010 Pardee Summer Research Fellow.

5  Fieldwork

5.1 Tokyo, Japan (2010-11)

I first started on-site field research in my first dissertation fieldwork year as a Visiting Research Fellow at the Institute of Social Sciences, the University of Tokyo (September 2010-October 2011) and as a Visiting Scholar at the Policy Research Institute, Ministry of Finance, Japan (February-October 2011) under the guidance of Professors Hiwatari Nobuhiro and Iida Keisuke, and the financial sponsorship of the Matsushita International Foundation, the Atsumi International Foundation, and the Setsutaro Kobayashi Memorial Fund.

I interviewed with a wide range of key actors in METI, MOFA, MOF, MAFF, BOJ and the Cabinet Office of the Government of Japan, and members of the Japanese Diet. I also encountered financial experts and businessmen, and did extensive data search and archival research at the MOF and at the University of Tokyo. Upon departure from Japan, I also made a formal presentation of my research in Japan at the University of Tokyo Social Science Dissertation Workshop (September 29, 2011) and to the Ministry of Finance (October 14, 2011) in front of many high ministry officials, under the title, ‘Resorting to International Institutions to Resolve Trade Imbalances? U.S. Protectionism via GATT/WTO Dispute Initiation’ (Japanese Title: 貿易不均衡の解消の為の国際機関の利用:GATT/WTOへの訴訟による米国の保護主義の発生’.

5.2 Beijing, China (2011-12)

I continued my fieldwork as a Senior Visiting Research Student at the School of International Studies, Peking University, China (October 2011-July 2012), under the guidance of Professor Wang Yong and the financial sponsorship of the China Scholarship Council of the PRC. I interviewed various scholars in the field of politics and economics at Peking University, Tsinghua University, Renmin University, Fudan University, and the IWEP, CASS. I also participated in various seminars on U.S.-China trade imbalances led by Wang Yong at Peking University and on the Chinese economy led by Li Daokui at Tsinghua University. I finalized my fieldwork in China by delivering a presentation of my research in China at the GR:EEN-GEM PhD School held at Fudan University (August 22, 2012) under the title, ‘Echoes of the Asian Financial Crisis in Reverse: Capital Controls and Currency Wars in the Wake of the post-Global Financial Crisis – Perspectives from EMEs with Comparative Case Studies of China and South Korea’. I will be returning to China in Summer 2014 to collect additional data for this piece with support from the BUCFLP and the Tobin Project.

5.3 Seoul, Korea (2012)

In between my fieldwork in Japan and China, I also conducted additional fieldwork at the government agencies in Seoul, South Korea, including politicians in the National Assembly in financial and economic subcommittees, and officials of financial and economic ministries and bureaus – the MOSF, MKE, MOFAT, BOK, KITA, and KCIF (January, August and September, 2012)

5.4 Washington, DC, United States (2014-15)

  • Prior Training, Service and Research

From top to bottom: With the 2005 GSP at the UNOG; with the 2005 UN Interns at the UNGA; with the 2006 UN Interns with former UNSG Kofi Annan; And with the Members of the UNSC Sanctions Committee established pursuant to UNSC RES 751.

Majoring in political science, I have been building my career as a researcher in the field of international and regional political economy, security, institutions, and law. Born and raised in Seoul, Korea, I have lived and traveled widely throughout North America, Western Europe, and East Asia. In my early years, I was temporarily raised in Los Angeles in the United States, where I picked up English and started learning French.

Taking formal training in the French language in high school sparked my interest in the European region, and led me to study abroad at the Université de Genève and the Institut Français des Alpes (IFALPES) Annecy (2002) during my undergraduate program. While studying in Geneva, I gained a profound interest in the political and economic functions of international organizations.

Upon entering my graduate program, I seized the opportunity and funding from the ROK Government to work on an economic and social development report at the Graduate Student Programme at the United Nations Office in Geneva (2005), and to work as an intern at the United Nations Department of Political Affairs Security Council (UNSC) Sanctions Subsidiary Organs Branch at the United Nations Headquarters in New York (2005-06).

My masters thesis entitled, ‘Legal Initiatives of the United States on the United Nations Sanctions Regime’ (Korea University, 2007), was written based on my service at the UN. My previous studies of the European region and work on international institutions became a strong foundation for my PhD work. The work I have been pursuing in my masters and my PhD program reflect my research interests in institutions at both national and international levels.

(Last updated: April 14, 2013)