The TPP conundrum

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The TPP conundrum

The government announced it will participate in the Trans-Pacific Partnership. After expressing its interest in the multinational trade deal last week, the administration has begun preliminary bilateral negotiations with TPP members who attended a ministerial meeting of the World Trade Organization on Bali, Indonesia, yesterday. The TPP is a free trade agreement among 12 countries, including the United States, Japan, Canada and Mexico, aimed at opening their markets to a higher level. If Korea joins the trans-Pacific group, the world’s largest economic bloc - accounting for 38 percent of the world’s gross domestic product and 28 percent of the world’s total trade volume - will be created.

So far, our government has more or less distanced itself from the TPP because of relatively meager economic benefits compared to the political and diplomatic risks involved. As Korea has already struck free trade deals with seven TPP members, including America and Chile, we can hardly expect significant additional gains from joining. Moreover, as the TPP was initiated by the United States to counter China’s growing economic influence, our government could hardly ignore the objections of China, Korea’s largest trading partner. The government must proceed prudently.

First of all, the government should not damage our relations with China. Given the TPP’s potential role as a catalyst for heightened economic friction on top of military and diplomatic squabbles between Washington and Beijing, our participation in the TPP could prompt China’s resentment. The government must make efforts to minimize Beijing’s misunderstandings while also pursuing a free trade pact with Beijing. For example, Korea can actively join in the Regional Comprehensive Economic Partnership that China has come up with, a counterweight to the U.S.-led TPP.

Second, the government must weigh the balance of the overall losses and gains. It can hardly convince the people that we can expect 2.5 percent economic growth per year after joining the TPP. Under the pact, Japan will be able to sell its cars, produced in Vietnam, here with no duties. Seoul must take into account political and social costs as well.

Third, the TPP will most likely lead to an additional liberalization of our beef industry, which could bring back the candle-bearing protests that broke out when the former government eased regulations on American beef imports. The government can let the National Assembly decide on the fate of the TPP deal.
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