The case for the TPP
Korea has indicated to the twelve countries participating in the negotiations for a Trans-Pacific Partnership (TPP) that it wants to join. With TPP talks advancing towards a likely conclusion in 2015, Korea must now decide whether to attempt to join the pact as a founding member. There are compelling reasons for Korea to do so.
The TPP is a proposed trade and investment agreement that would eliminate almost all tariffs and otherwise facilitate commercial ties among its signatories. The current negotiating partners, together accounting for more than one-third of global gross domestic product, are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. For the United States, the TPP represents one of President Obama’s most significant trade initiatives and reflects his administration’s goal of cementing and deepening ties with Asia.
While the current negotiating partners plan to sign the TPP in 2015 with no additional members, they also anticipate a subsequent expansion of the pact to include Korea and other Pacific Rim economies, potentially even China. For its part, Korea wisely decided to defer action on TPP from the start. Korea, after all, already has free trade agreements with most of the twelve TPP participants. Korea has also recently focused on the completion of its bilateral trade deal with China, a major step forward with Korea’s largest trading partner.
Nevertheless, powerful reasons exist for Korea to accelerate its efforts on the TPP and to attempt to join as a founding member. The economic advantages would be substantial. Korean industries would benefit from the additional market access that the TPP would generate, as well as from unified rules of origin within the trading bloc. The advantages of common trading rules under the TPP would only grow as additional countries join.
Korea’s stature and leverage in other ongoing negotiations would also stand to gain. Entry into the TPP as a founding member would confirm Korea’s vision of serving as a hub for Asia-Pacific economic integration and a bridge between China and the United States. It would also fortify Korea’s alliance with the United States through participation in the most significant Asia-focused trade initiative of the Obama administration, now that the U.S.-Korea Free Trade Agreement is in place. Entry into the TPP as a founding member would also improve Korea’s position in the ongoing China-led Regional Comprehensive Economic Partnership (RCEP) trade negotiations, and would help Korea manage tense relations with Japan. In fact, Korea’s absence from the TPP as a founding member could raise doubts about Korea’s priorities and capacity for leadership in forging a new economic order in the Pacific Rim. Already, Korea’s participation in RCEP under China’s leadership, while it remains absent from the TPP, suggests a reorientation of Korea’s trade policy. Participation in RCEP and a drive to join TPP are not mutually exclusive. Many other TPP participants have also joined the RCEP negotiations. Also, Japan’s participation in the TPP talks, with Korea absent, reinforces an image of Japan as America’s principal economic ally in East Asia.
Moreover, if Korea is not among the TPP’s founding members, it may be difficult to maintain momentum for future inclusion in the deal. In Korea, the current consensus favoring Korea’s inclusion in the TPP may wane. In the United States, any delay in the negotiations beyond 2015 will cause an overlap with campaigning for the next U.S. presidential election, when support for trade deals is always more difficult to obtain.
For Korea to become a founding member of the TPP, it should employ a three-fold strategy. First, in order to overcome the current U.S. position on the issue, Korea must present a strong intellectual case that Korea should join as a founding member. This strategy should focus both on the advantage to all TPP participants if Korea is included in its founding ranks, as well as the negative signals that the exclusion of Korea - as the world’s 15th largest economy, seventh largest exporter, and major security partner of the United States - would send.
Second, in order to reinforce these themes, Korea should create a coalition of champions in U.S. industry and on Capitol Hill who will exert pressure on the Obama administration to include Korea as a founding member. Korea employed such efforts with great success to overcome the Obama administration’s initial reluctance to enter into the Korea-U.S. FTA.
Third, Korea should help the existing participants in the TPP negotiations support it by immediately addressing any of their objections to Korea’s inclusion as a founding member, including their concerns that it may be too late, with about one-third of the agreement’s 29 chapters concluded. Korea must also work with the U.S. towards a rapid and mutually satisfactory conclusion of the few outstanding aspects of the Korea-U.S. FTA implementation, on which the Obama administration conditions support for Korea’s entry into TPP. It is late in the game for Korea to join TPP as a founding member. But for the reasons discussed above, it will be much better for all negotiating partners and for the pact itself if it is expanded to include Korea from the start.
JoongAng Ilbo, Jan. 5, Page 29
The author is a senior partner at the law firm of Akin Gump Strauss Hauer & Feld LLP in Washington, D.C.
by Sukhan Kim