[Asia Economy Reporter Moon Chaeseok] One year after confirming differences of opinion among government ministries regarding South Korea's accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) at a Blue House meeting, the government has expressed the position that this is not an issue to be rushed.
On the 27th, the Ministry of Trade, Industry and Energy stated that it is not a situation to hasten CPTPP accession. They judged that pursuing membership now would bring limited practical benefits. Among the 11 countries currently in the CPTPP, including Japan, Canada, and Mexico, South Korea has free trade agreements (FTAs) with all except Japan and Mexico. Since the United States is out of the CPTPP and Japan holds significant influence, the consensus is that the practical benefits have diminished further.
There is a scenario suggesting that by bringing India and Oceania countries into the CPTPP, Japan's influence could be reduced and South Korea's national interests safeguarded, but its feasibility is low. The United States is implementing an "Indo-Pacific strategy" to check China through India, Australia, and Japan, making it difficult for South Korea to lead India into the CPTPP.
Even if South Korea joins the CPTPP, opinions suggest that the benefits in terms of the global value chain (GVC) would not be significant. According to government and academic sources, whether it is the CPTPP or the Regional Comprehensive Economic Partnership (RCEP), trade must occur among countries specialized in finished products, intermediate goods, and labor costs within the region to make the value chain denser.
The world's goods are shifting from manufacturing to service industries. Major companies in countries like China establish factories domestically and operate on a "one-stop" basis, so they do not necessarily seek to utilize labor costs or intermediate goods from other countries. Even if South Korea voluntarily joins the Japan-led CPTPP, it remains unclear what role South Korea can propose to any of the 11 member countries to maximize the GVC within the region.
External variables such as international trade and historical disputes with Japan, as well as differences among government ministries, are reported to have not significantly narrowed compared to a year ago. A year ago, there were clear disagreements among ministries over non-tariff barriers such as subsidies, animal and plant quarantine, and trade technical barriers. The ministries responsible for industry and agriculture/fisheries were concerned that opening up would require completely revising laws and systems, weakening competitiveness, while economic and diplomatic ministries argued for prompt advancement considering various factors including industry.
The CPTPP accession process requires applicant countries to ▲accept CPTPP norms and ▲offer the highest level of market access, but these "norms," which refer to non-tariff barriers, are burdensome. According to a Ministry of Trade, Industry and Energy official, the level of norms is higher in CPTPP than in FTAs, and even higher in the United States-Mexico-Canada Agreement (USMCA) than in CPTPP. Although there are researchers studying USMCA within the ministry, it is difficult to say they are studying it on the premise of possible CPTPP accession.
The situation in the automotive industry, the biggest obstacle, is also challenging. Japan's import car tariff is 0%. Considering that the CPTPP essentially functions as an FTA with Japan, the prevailing cautious view is that South Korea does not need to initiate competition with Japan in the global market.
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