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Economy

South Korea moves to join CPTPP free trade pact as China fears ease

But Korea faces hurdles such as opposition from the farming and fishing industries and its frosty relations with Japan

By Dec 14, 2021 (Gmt+09:00)

4 Min read

The CPTPP, a multilateral free trade deal, was launched in 2018 by 11 member states including Japan
The CPTPP, a multilateral free trade deal, was launched in 2018 by 11 member states including Japan

South Korea has officially declared its plan to join a mega Trans-Pacific free trade deal, called the CPTPP, following China’s application to the regional pact, which eased concerns that Seoul may upset its biggest trading partner.

However, Korea’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership could take several years, given the necessary procedures before joining the pact. The country also faces strong opposition from its farming and fishing professionals concerned about intensified competition with foreign rivals.

Another potential stumbling block, analysts say, will be Korea’s estranged relationship with Japan, which currently chairs the CPTPP. Korea’s membership to the pact requires a unanimous vote of approval by its current 11 member states.

“After reviewing the economic and strategic value that we can get from the CPTPP, we’ve decided to move ahead with our plan to join it,” Deputy Prime Minister and Finance Minister Hong Nam-ki told a meeting of related ministers on Monday.

“The government will hold social discussions to collect public opinions from various groups of stakeholders.”

Finance Minister Hong Nam-ki announces Korea's move to join the CPTPP
Finance Minister Hong Nam-ki announces Korea's move to join the CPTPP

The CPTPP was launched in 2018 as a successor to the Trans-Pacific Partnership (TPP), a trade agreement negotiated by former US President Barack Obama and designed to limit China's growing economic and political influence in the region.

Members of the free trade deal are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam.

Trade volumes among the 11 member countries with a combined population of 510 million, reach $5.7 trillion, accounting for 15.2% of the global trade, according to a Korean state-run think tank.

Korea had been hesitant about joining the pact, partly because of concerns about damaging relations with Beijing. However, Korea renewed its interest after China submitted its application to the CPTPP in September, and Taiwan followed suit a week later.

Analysts say Korea will be able to lower its trade dependency on China and diversify its trade partnerships if it becomes a CPTPP member.

FRAYED TIES WITH JAPAN

Industry watchers say Korea needs to improve its frayed relationship with Japan in order to join the CPTPP.

The two countries are embroiled in a dispute at the World Trade Organization over Tokyo’s export controls on products, including semiconductor components, to Korea.

Korea, in turn, has imposed an import ban on some products from Japan, including fishery products from Fukushima Prefecture, following the 2011 meltdown at Tokyo Electric Power Co.’s nuclear power plant.

The CPTPP, a multilateral free trade deal, was launched in 2018 by 11 member states including Japan
The CPTPP, a multilateral free trade deal, was launched in 2018 by 11 member states including Japan

Meanwhile, Australia has vowed to back Korea’s membership of the CPTPP pact during Korean President Moon Jae-in’s visit to the country.

During a joint press conference with Moon on Monday, Australian Prime Minister Scott Morrison said the CPTPP sets a high bar for countries that understand the importance of the rule of law in trade, and that “Korea has already achieved those marks.”

AGRICULTURE, FISHERIES MAY TAKE A HIT

The Korean government’s push for CPTPP membership is expected to face steep opposition from the local farming and fisheries industries.

“Farmers’ concerns have already been heightened due to the National Assembly’s ratification of the RCEP. If Korea also joins the CPTPP, it would mean the collapse of the country’s agricultural production base. We will fight against the move to the end,” said the Korean Advanced Farmers Federation.

The Regional Comprehensive Economic Partnership, reached in November 2020, will go into effect early next year.

Korea's exports heavily depend on China, its biggest trading partner
Korea's exports heavily depend on China, its biggest trading partner

The RCEP covers the 10-member Association of Southeast Asian Nations (ASEAN), South Korea, China, Japan, Australia and New Zealand. The trade pact is known as the world's biggest FTA as its 15 member countries account for around 30% of the global gross domestic product.

The Korean government may be unable to make a final decision on its bid to apply for the CPTPP by the first half of next year as the country is set to hold a presidential election in March and general elections in June, analysts said.

Before submitting an official application, Korea must go through several mandatory procedures, including holding public hearings, notifying the National Assembly of the final government plans, and discussions with member countries.

Write to Eui-Jin Jeong, Ji-Hoon Lee and Kyung-Mok Noh at justjin@hankyung.com
In-Soo Nam edited this article.
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