More deliberation, study is neededThe country could pay a dear price - both politically and economically - if it enters negotiations on the Trans-Pacific Partnership in the near future.
Twelve countries are engaged in the talks aimed at turning the Asia-Pacific region into the world’s largest trading bloc. What started from a small-scale regional free-trade framework is, however, now led by the United States and Japan.
South Korea would have to deal mostly with the United States and Japan if it enters the talks.
We have to study the background that led to the sudden spotlight on our potential entry ahead of the Asian Pacific Economic Cooperation summit in October 2012.
I do not oppose Korea joining the trade block itself, but the timing should be decided after more thorough deliberation and study.
If Korea joins the talks now, the controversy and social divide over the hard-won Korea-U.S. Free Trade Agreement would resurface and motivate the opponents of the bilateral deal to demand renegotiations on the free trade pact that is already in effect.
If Seoul inevitably goes into renegotiations, Washington will likely demand additional liberalization on meat and rice imports, as well as the service sector and the lowering of the non-tariff section. In return, Seoul will ask for a revision in the contentious provisions on the Investor-State Dispute Settlement, commerce relief mechanism and protection on intellectual property rights.
Once Korea enters serious talks on a bilateral free trade deal with China, controversy over agricultural products could become heated as local farmers will likely strongly protest an influx of cheap Chinese farm produce.
Society would be seriously divided and unsettled by the wrangling over opening its markets if pressure over the liberalization of meat and rice imports is mounted by the United States and China.
The TPP also means negotiating a free trade pact with Japan, which would not be easy.
After South Korea announced its policy on the FTA in 1998, we went into talks with Japan on a bilateral deal. But the more they talked, the wider their differences became, and the talks ended.
Some say Japan will likely ease its position in a multilateral framework. But even under TPP, terms on liberalization are bilaterally settled among concerning countries, and Japan won’t likely change its position on the Korean market.
An FTA with Japan is complicated because its repercussions on the Korean economy are huge - mostly hurting the small and mid-sized corporate sector. Most small and mid-sized companies that compete with Japanese counterparts cannot win in the Japanese market.
Large manufacturers such as Hyundai Motor welcome a FTA with Japan because they rely on Japanese parts and they can increase exports to the Japanese market.
Such a deal with Japan will most likely invoke strong protest from small and mid-sized companies. The current government, which has been pledging support for the small and mid-sized corporate sector, likely won’t easily enter talks on free trade with Japan.
Since the APEC summit talks, South Korea has been active in pursuing bilateral free trade deals and working on the Free Trade Area of the Asia-Pacific, which envisions a free trade zone and economic consolidation among 21 APEC countries.
Seoul remained mum on questions about the possibility of Korea joining the TPP ahead of the summit talks. A chief presidential secretary only said there was much to be studied.
It is not too late to enter the talks after Seoul finalizes FTA talks with China and reaches a public consensus on the scope on rice liberalization.
Seoul could then be less burdensome on addressing contentious issues in the multilateral framework.
Translation by the Korea JoongAng Daily staff.
*The author is an economics professor of Inha University.
By Chung In-kyo