It is better to enter the talks nowDespite mixed reports about Seoul joining talks on creating one of the biggest regional tariff-free trading blocs, the government has yet to decide whether it will enter the negotiations. It will naturally have to contemplate hard before an official announcement, given the high-profile attention on the issue.
It would have to coolly consider the benefits and damages to the local economy, as well as the impact on long-term economic and trade policies and global commerce trends.
Some argue South Korea will benefit little from joining the new trade bloc. A study by the Korea Institute for International Economic Policy, sponsored by the Ministry of Industry, Trade and Energy, concluded that the Trans-Pacific Partnership would help accelerate growth in South Korean economy by 2.6 percent in the long run.
It warned that the local economy could lose 0.11 percent in growth if it doesn’t join the multilateral trade bloc.
Peter Petri, a professor at Brandeis University, and his team at the East-West Center, also reached similar conclusion on the TPP, saying that it would become the biggest trade agreement since the Uruguay Round, bringing a positive-sum game to all members and defining the trading rules of the 21st century.
Potential gains from the TPP cannot be ignored.
The timing of Korea’s entering the talks is also in debate. Experts mostly agree that it should eventually join but disagree about the timetable. Those who argue there is no rush in entering the talks say Korea should allow more time to wait for the benefits from hard-won bilateral trade agreements. But on the international stage, countries are shifting quickly to multilateral free trade frameworks from bilateral ones. They believe one single broad-based multilateral free trade pact is more effective than numerous bilateral trade accords.
Some also question the need for another multilateral regional free-trade treaty when Korea is already participating in the talks of establishing a Regional Comprehensive Economic Partnership with a group of Pacific countries and the Asean members, as well as building a trilateral accord with China and Japan.
But the RCEP and Korea-China-Japan negotiations are still in the early stages, while the talks on TPP are mature after 19 rounds of negotiations.
Even if it cannot be completed by the end of the year as envisioned by the United States, it would likely be born earlier than the RCEP, which is aiming for a 2015 conclusion. A Korea-China-Japan deal is still in the study stage.
The TPP aims to set the tone for the 21st-century multilateral trade order through high-level liberalization (100 percent) and new trade rules.
While announcing a road map for new commerce in June, the government pledged to play a central role in regional economic bloc talks. Joining the TPP should be necessary for such a goal. If it plans to enter the negotiations, it should take legitimate procedures to get into them as soon as possible, for several reasons.
First of all, the TPP negotiations are famously secretive. Details are inaccessible unless a country becomes a formal member.
Second, a latecomer would have to comply with the agreements that have already been reached in earlier talks.
A consensus has already been reached on five or six of the 29 sectors. Other sectors reportedly are near compromise. If we join after negotiations are nearly finished, we won’t have any say in the accord.
Third, the deal will likely draw more members as time progresses. Our membership would then require approval from original members.
The difference in opportunity cost from early and late entry to the talks is big. The reasons opponents cite to argue for delay - damages to the industry and potential social conflict - won’t go away just because we drag our feet.
Translation by the Korea JoongAng Daily staff.
*The author is a fellow of the Korea Institute for International Economic Policy.
By Chung Chul
More in Columns
Time for pragmatism
How do we spell relief?
A battle over fiscal control
Time for a ceasefire