While the United States and China, the world’s top two economic powers, began adding momentum to their multilateral trade negotiations, it has become a key task for Korea to define its priorities.
But it also faces the dilemma of maintaining the balance between the China-led Regional Comprehensive Economic Partnership and the U.S.-initiated Trans-Pacific Partnership.
“The government’s policy on the TPP is yet undecided,” said an official at the Ministry of Trade, Industry and Energy on Monday.
“We shall first examine all factors such as the effect that the TPP may have on our economy or on the ongoing Korea-China bilateral Free Trade Agreement talks.”
The ministry’s statement came in response to the growing speculations that it decided to join the TPP umbrella within this year.
The MOTIE had largely been passive over the trans-Pacific trade pact in the past, claiming that it would bring few benefits to Korea as it already has a highly-binding bilateral FTA with the United States.
However, as Japan and the U.S. recently made gestures to accelerate their TPP talks and to hopefully wrap up the negotiation process with the year, concerns mounted that Korea may fall behind in the world trade order unless it, too, joins the TPP discussions.
The Trans-Pacific trade pact, once effectuated, is to incorporate some $27 trillion, or 38 percent, or more of the world’s total economy.
Reflecting a sense of crisis, the MOTIE last week held a series of expert forums to discuss the social, political and economic effects of the TPP.
“Considering the concerns that Korea should not fall behind, we will remain open to all scenarios,” said Trade Minister Yoon Sang-jick in a forum last month.
Despite the positive change in stance on the U.S.-led talks, Korea’s priorities are nevertheless the bilateral FTA talks with China and the RCEP negotiations with China, Japan, and ASEAN states, according to officials.
“Korea already has a strongly-binding FTA with the United States and the European Union and will gain its initiative in most of the regional trade talks, should it clinch the Korea-China FTA,” said assistant deputy trade minister Choi Kyung-lim.
The trade ministry, which announced its new trade policy blueprint in June, thus claimed that Korea should aim at becoming a linchpin in the Asia-Pacific economy.
It also boosted its moves toward the RCEP negotiations, as well as the trilateral trade pact talks with China and Japan.
The trade deals with China, however, face multiple obstacles, especially over the tariff cut on agricultural, fisheries and livestock goods.
“The Korea-China FTA, unlike the Korea-U.S. FTA, is not likely to involve a high level tariff cut, as the agricultural goods issue is highly sensitive,” the minister said.
Observers thus claimed that Korea should not neglect the potential of the U.S.-led TPP umbrella.
“Unless we join the TPP round and express our opinions right away, we may lose initiative in the world trade order and be forced to accept the trade rules established by other countries,” said Heo Yoon, professor at Sogang University.
Agricultural experts, however, also pointed out that the TPP is based on an non-exception tariff cut on all products and that it would inflict critical damage to Korea’s local agricultural industries.
By Bae Hyun-jung (email@example.com