Joining the TPP party

At the Asia-Pacific Economic Cooperation summit in Indonesia last week, President Park Geun-hye had positive words to say about the Trans-Pacific Partnership, or TPP, an ambitious plan to create a multilateral free trade zone involving Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. While Korea has not officially joined the negotiations, the body language is positive.

Perhaps President Park refrained from a formal announcement of Seoul’s interest because the trade pact’s champion, President Barack Obama, was absent from the meetings due to political gridlock in Washington. But Seoul looks well-positioned to seek an entry to the TPP either as a founding member by the end of 2013 or as one of the first new members in the implementation phase (i.e., post-founding phase) in 2014.

Skeptics may question what the benefit to Korea is of joining TPP when Korea already has FTAs with large economies like the United States and the European Union. The most important market for Korea is China, and that is the priority of current trade negotiations.

But there are tangible benefits that could come Korea’s way with the TPP. The most important benefit relates to Japan. ROK-Japan FTA talks have effectively been shelved for years now with little progress. One of the primary impediments in the talks has been Tokyo’s reluctance to eliminate various non-tariff barriers that protect the country from Korean products. In this regard, Seoul paid little attention to the TPP until Japan joined the negotiation this summer and committed, at least in principle, to address NTBs as part of the negotiations. Joining a successful TPP agreement could therefore provide market access to Japan.

The primary impediment to Korea joining the TPP has been political blowback - from China and from a domestic audience. In the former case, the ROK government and expert community initially saw the TPP and a China-ROK FTA in zero-sum terms. Indeed, when I asked a former Korean negotiator for KORUS on the one-year anniversary of the trade agreement about Korea’s interest in the TPP, his pithy three-word deflection was “China-Korea FTA.” However, Korea’s participation in the TPP can offer potential leverage in its negotiations with China, rather than act as a hindrance. This could be helpful now that Korea will enter the upcoming second round of negotiations, which promises to be much more difficult than the generalities concluded in the initial round.

Domestically, there is a degree of “FTA fatigue” after the protracted KORUS negotiations and the conclusion of several major FTAs. However, making their domestic rules and policy technically conform to TPP requirements is not that hard for Korea. On Basic Rules, much of these clauses are already familiar to Seoul since the KORUS text stood as the template for the TPP negotiations. A former KORUS negotiator stated that Korea could sign on to the basic text of the 29 chapters “in five minutes.” On Market Access, as noted above, Korea will be focused on maintaining a high standard that puts pressure on Japan to eliminate NTBs such that the TPP can act as a vehicle for South Korea’s access to the Japanese market.

A complicating issue going forward may be the timing of Korea’s joining. At the bureaucratic level, the ROK may be withholding an announcement because of an apparent miscommunication regarding the modalities of its accession. South Koreans believed the substantial overlap between the provisions of the TPP and their FTAs with the United States (KORUS) and EU would allow them entry as the last country in the founding phase of the TPP, which U.S. negotiators hope to finalize by the end of the calendar year.

But things may not be that simple. It takes nine months on average for a new member to gain entrance. That would put Korea’s potential membership well beyond the 2013-end timeline for a framework agreement. TPP negotiations may not finish in 2013 and could extend into next year, which might still permit Korea to join as a charter member. But a likely scenario might be for Korea’s accession as one of the first test cases of a new member “docking” on to the TPP in the post-founding phase.

How did the Koreans end up being willing but late to the party? Part of the reason stems from protracted internal debates in Seoul about the merits of joining the TPP versus the China-based RCEP. This delayed a decision well into the fall. Another reason may be the Park government’s devolving of trade authority from the Foreign Ministry to the Ministry of Trade, Industry and Energy at the beginning of her presidency. The former organization carried the ball on trade since 1998, and was well-known for a strategic, savvy and omniscient posture in making trade policy compared with the more functional and narrowly-focused bureau in which negotiating authority now sits.

Nevertheless, Seoul would be well-advised to support the TPP even if they are late to the party. Washington and Seoul should develop a consultation mechanism this fall in order to facilitate Korea’s joining in the founding or post-founding phase. Even with TPP membership, Korea can push forward with FTA negotiations with China. The ROK Trade Ministry’s June announcement of a new trade strategy in which Korea acts as a linchpin for regional economic integration, linking its China FTA with the TPP, may be Park’s ultimate positive legacy on trade architectures in Asia.

*The author is professor at Georgetown University and senior adviser at the Center for Strategic and International Studies in Washington, D.C.

By Victor Cha