Finance Minister says S. Korea to participate in TPP “in some way”

Posted on : 2015-10-07 16:22 KST Modified on : 2019-10-19 20:29 KST
Experts advising caution on rushing into TPP, citing potential impact on S. Korean economy
 at the National Assembly in Seoul
at the National Assembly in Seoul

South Korea’s Minister of Strategy and Finance said on Oct. 6 that Seoul plans to “consider participating in the Trans-Pacific Partnership (TPP) in some way.”

The remarks by Choi Kyoung-hwan, who also serves as Deputy Prime Minister, come in the wake of an announcement the day before that the twelve partner countries, including the US and Japan, had reached an agreement on key issues through minister-level negotiations.

“We’ve decided to negotiate and participate to the extent that we can uphold our national interests,” Choi said during a parliamentary audit on Oct. 6 by the National Assembly Strategy and Finance Committee. Choi added that there were “limits to the specifics I can discuss in terms of when and under what conditions, since there would be other parties to the negotiation.”

Choi also discussed the TPP’s potential impact on the South Korean economy. “There are cumulation of origin regulations that could have an impact on exports,” he acknowledged. “In free trade agreement (FTA) terms, we have the edge over Japan, but I think there is a more positive side for Japan from TPP membership in terms of cumulation of origin [terms],” he added.

Choi also said that rice would be an “exception” to market openness if South Korea does join the partnership.

Commenting on South Korea’s absence during the agreement on TPP terms, Choi explained, “When the US first declared TPP negotiations in 2008, the South Korea-US FTA had been signed and talks were in progress for the South Korea-China FTA, so the administration made the decision that it would be better to focus on those.”

Seoul has been increasingly vocal about plans to participate in the TPP since first expressing an interest in Nov. 2013. But many experts are advising prudence and cautioning for the South Korean government to take its time. With existing bilateral FTAs between South Korea and ten of the twelve partner countries (Japan and Mexico are the exceptions), experts say the country has little chance of losing out much from remaining outside the partnership‘s framework for now.

“If you look at the effects of market openness with tariff abolition, joining the TPP is a lot like a roundabout way of signing a South Korea-Japan FTA,” said Sungkyunkwan University economics professor Kim Young-han. “You have to weigh the pros and cons carefully, especially when you consider the fact that Japan has an applied tariff rate of less than one percent for South Korean exports there while South Korea’s tariff rate on Japanese imports is over seven percent, the fact that Japan’s non-tariff barriers are beyond resolution by an FTA, and South Korea’s technology edge in key parts and materials areas,” Kim noted.

Kim also remarked on the risk of missing out on cumulation of origin effect from not joining. “That’s limited to the textile industry and low value-added manufacturing businesses that get parts from places like Southeast Asia,” he said.

Ajou University economics professor Kim Han-sung commented that it would “take a long time for the TPP to establish itself as the new norm for the Asia-Pacific region.” “Rather than overstating the short-term and medium-term losses and paying a steep entrance fee to join the TPP, we ought to adopt a more circumspect approach where we consider the different discussions on other multilateral trade orders,” he suggested.

By Jung Se-ra, staff reporter

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