Forging the Future: The EU-South Korea Digital Partnership in the AI Era

The EU and the Republic of Korea signed a digital partnership in November 2022. Despite differing regulatory approaches to the evolving global AI market, a renewed AI partnership is emerging that aims to boost international market access, foster innovation, and establish a unified regulatory framework, benefiting both regions as well as global AI governance.

Over the past decade the Republic of Korea (hereafter also referred to as the ROK or South Korea) and the European Union (EU) have consistently implemented a series of agreements to strengthen their bilateral cooperation. These agreements span various areas, including economic cooperation through the EU-ROK Free Trade Agreement (FTA) and security agreements such as the Crisis Management Participation Agreement (CMPA). These efforts helped build a robust relationship, positioning the EU as South Korea’s third-largest economic partner, while the ROK represents one of the EU’s most strategic partners in Asia. Given the recent surge in technological innovation, both partners decided to sign a digital partnership in November 2022. Its aim is to foster innovation processes and address fundamental challenges associated with emerging technologies, including 6G, AI, cybersecurity, semiconductors, and quantum computing. The digital partnership also intends to solidify production chains, particularly in the field of semiconductors. The sector’s supply chain remains highly complex, with some Korean companies such as Sk and Samsung, and EU companies like ASML as major global producers of key components. This strengthened partnership is in line with the EU’s de-risking strategy, capitalising on synergies of the digital agreements. Additionally it supports Korea’s export-oriented economic focus.

Shortly after the digital partnership’s signing, the AI market started transitioning from a relatively reserved academic field to gaining global popularity. The commercialization of ChatGPT by OpenAI prompted businesses and governments worldwide to confront the reality and potential influence of Artificial Intelligence. In the private sector, companies capable of developing AI systems rushed to adopt this rapidly growing technology. Meanwhile, various governments responded to the innovation from a regulatory perspective. The EU took a more regulatory approach, being one of the first to establish a regulatory framework on AI, emphasising the containment of potential risks associated with the new technology. In contrast, in South Korea, major technological companies such as Samsung, SK, Naver, and Kakao developed AI systems to compete with international rivals like Google and Bing. This led to a softer response from the Korean government, appreciating the international competitiveness gained by Korean companies. Consequently, to allow its market to flow rapidly and attain higher competitive levels, the ROK government has been more cautious in adopting regulations. However, given the challenges posed by the technology, South Korea will have to tackle these from a regulatory perspective. On the EU side, preventive regulation may have slowed down the development of an internal AI market. How can the EU and South Korea cooperate to achieve their desired results? Considering the similarity of their AI sectors in terms of interdependence and potential risks, how can their partnership evolve in this regard and what could be potential synergies and challenges?

The Current Status of AI 

Even though AI has been predominantly popularised in the field of Generative AI and its Large Language Models, the field is thriving with a plethora of applications in various professions, including some of the most critical sectors. Before delving into the potential risks associated with AI, it is essential to note that AI applications and innovations are primarily driven by the private sector.

AI finds application in a range of different industries, like in healthcare for diagnostic analysis, where the use of medical watches enhances its preventive functions. In the finance sector, AI is widely employed for fraud prevention and analysing the credit profiles of customers seeking loans. In agriculture and manufacturing, it aids in predicting the need for maintenance, and in agriculture specifically, it serves as a valuable tool for weather predictions, optimising crop rates. Other sectors, such as education, transportation, and retail services also derive substantial benefits from AI. Essentially, AI has already impacted nearly every sector of the private economy. Overall, when there is a high production of data combined with the capital for implementing machine learning models with high computational power, AI quickly becomes an integral part of that specific market. In the public sphere AI has gained a significant impact on various aspects of security, providing governments with the potential for substantial military advancements while also posing new challenges and growing risks.

The effects of the recent AI evolution are manifold, affecting both the private sector and governments. The commercialisation of AI products, some of which previously (until not so long ago) confined to university conferences and specialists, has brought numerous benefits in terms of development and increased efficiencies. Simultaneously, it has presented several challenges. In the private sector, concerns revolve around the potential impact on employment at the lower levels of the skills and education chain, where major job disruption may occur as a result of automation. Additionally, there is evident concern related to privacy and data usage.

On the government side, major concerns encompass two main topics: the possibility of creating extremely realistic deep fakes and additional threats posed by AI on cybersecurity. Deep fakes have the potential to influence opinions and elections, undermining the fundamentals of democracies. From the cybersecurity perspective, the possibilities of AI are yet to be fully discovered. Military applications of AI have so far been the primary focus of government-funded research, which is widely considered the most critical aspect. Any AI application at the military level may bring enormous destructive potential.

The EU Regulatory framework and the ROK’s competitiveness 

The various threats and benefits arising from the advent of AI have compelled the governments of the EU and South Korea to respond and adapt. Yet we observe a divergent approach in addressing the issue.

Thus far the EU has mainly taken a preemptive stance, seeking to mitigate potential negative effects related to AI development. The European Artificial Intelligence Act was initially drafted in February 2023 and later revised and expanded in June 2023, being finally approved on 9 December 2023. The EU’s AI Act aimed to provide an initial classification of various forms and applications of the technology, establishing preemptive measures to limit potential risks. The EU explicitly prohibited AI applications related to biometric recognition and social credit scoring. Additionally, the Act defined four levels of risk, ranging from “high” to “low.” The higher the risk level, the more stringent the compliance standards set by the EU. Notably, multipurpose AIs like ChatGPT were classified as a medium-high level of risk. This is crucial, considering that ChatGPT is the most commercialised AI product thus far and appears to pose no particular risks aside from potential concerns about user privacy. The European approach has faced criticism from many EU companies, as the perceived risk may overly restrict innovation and the competitiveness of European firms. Consequently, the EU is attempting to counterbalance the private sector slowdown by implementing research funds through the Horizon Europe program. However, many experts argue that this might not be sufficient, pointing to the lack of a comprehensive industrial policy in AI investments. 

In South Korea, President Moon’s government already adopted its first comprehensive AI strategy back in 2019. Primarily focused on increasing investment in the sector and expanding usage in various fields, the strategy aimed to address the challenges brought about by the development and diffusion of ChatGPT. The South Korean government updated its legislative agenda and proposed ethical guidelines for AI companies and researchers to limit associated risks. However, this falls short of a complete legislative framework comparable to the one being implemented in the EU. The Korean government continues to seek the right regulation to enact, driven in part by the country’s vibrant digital market. Particularly noteworthy is South Korea’s competitive stance in AI patenting, positioning itself as the only competitor to the two main AI giants, the US and China. This competitiveness is a result of substantial investments by major technological conglomerates like Samsung and SK. 

Despite the US being the first mover in commercialising AI, the ROK has rapidly caught up, allowing for a competitive edge in commercialising AI bots. The Korean government, mindful of solidifying its global competitiveness in AI, thus faces two main options, either following the EU’s preemptive approach or adopting the more relaxed regulatory framework of the US. The former emphasises limiting risks related to AI applications, while the latter focuses on facilitating the fastest technology development for more patenting and a competitive advantage, especially in AI military applications. Therefore, it will be essential for the EU to involve Korea in a specific collaborative joint program focused on AI.

Why AI deserves its own partnership

The synergies that such a partnership could entail are manifold, potentially offering substantial benefits to both South Korea and the European Union. First, for the Korean case, even though its internal AI market has been flourishing, the big companies producing AI applications still struggle to find their place on the international market. An EU-ROK partnership could help such companies to find their space in a less saturated market as the European one. In exchange to this facilitation, EU companies and Member States could benefit from the possibility of joint ventures with these mentioned Korean companies, benefiting from the acquired expertise in innovation of Korean firms. This could also pave the way for a possible digital FTA in the future. A specific remark in this field should be made in reference to the growing demand for AI chips. South Korean companies such as Samsung and Sk Hynix are already trying to be at the edge of technological innovation. Collaborations with European companies such as the Dutch ASML or German Infineon could surely help those companies to further innovate and be ready to compete internationally. Enhancing the EU-ROK digital partnership would also help to strengthen the supply chain and make it more prepared for possible shocks caused by global political instabilities. From a European perspective it would be necessary to foster cohesion in policy enforcement and in creating a common policy framework in what is one of the most strategic sectors of the 21st century.

Since the EU has established the first regulation on AI in the world, it is very likely that other countries will follow by using this act as a model. The EU, as a standard-setter, will be able to play a major role in helping those countries develop their regulatory framework. In particular since these kinds of regulations become more effective once adopted worldwide, especially by the major AI leading countries. The AI partnership could therefore be beneficial both for South Korea, which would receive specialised and ongoing assistance in adopting AI regulations, while enabling the EU to establish a dependable collaborator that shares common values and rules for addressing AI risks. This will help both countries monitor the various effects of their respective AI acts, while it could also help in identifying different effects through regulatory diversification.

The most practical way to establish such a partnership could be established through a permanent AI council between the EU and South Korea, composed by the main AI representatives and experts from the EU and South Korea, in addition to other key stakeholders involved, committing to regular meetings and exchange of information. Starting from this, the way to an enhanced AI partnership would be paved,  enabling the implementation of the various proposals made so far. Additionally, this council could represent the starting point for an expanding AI cooperation towards the rest of the world, advancing the impact of European and Korean AI diplomacy on a global scale.

Author: Giacomo Vavassori, EIAS Junior Researcher

Photo credits: Pixabay