Saenuri ponders Korea’s fate outside TPP

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Saenuri ponders Korea’s fate outside TPP

A sense of alarm shook the ruling Saenuri Party just a day after 12 Pacific Rim countries concluded negotiations on a deal that would leave Korea out of dramatic changes to take place in global trade and industry.

The concerns reflected a sense of agitation among ruling party members over whether Seoul had fumbled by failing to join the 12-member Trans-Pacific Partnership (TPP) and therefore lost its competitive edge in the global market.

The accord is aimed at easing commerce regulations among countries that make up nearly 40 percent of world’s economy.

“I have worries on the state of the country’s economy when it comes to its role in the global economy because not only did Korea belatedly join the Asia Infrastructure Investment Bank (AIIB), but it also failed to join the TPP,” said ruling party lawmaker Kim Jung-hoon, who heads a party policy committee.

Kim’s concerns mostly centered on whether the country could lose out to Japan, which as the world’s third-largest economy could export its products with no import tariffs to 11 TPP nations.

“We now face the looming prospect that we could be at a disadvantage in many sectors, including the automobile industry, when competing with Japan, which can benefit through the TPP pact,” he said.

The TPP is intended to eliminate import tariffs and other barriers on traded goods and services among its 12 member countries: the United States, Canada, Japan, Singapore, Vietnam, Australia, New Zealand, Brunei, Malaysia, Chile, Mexico and Peru.

The deal does not include China.

Korea has been ambivalent about the TPP, particularly as it negotiated a free-trade agreement (FTA) with China. But that ambivalence has now become the subject of debate since negotiations in Atlanta resulted in the deal’s conclusion, with Japan potentially emerging as the biggest beneficiary.

Experts say Korea could lose its price competitiveness in 10 of the TPP’s 12 nations, as prices for Japanese products would now be reduced. Korea has FTAs with most of the TPP member countries, except Japan and Mexico.

The Korean government expressed its willingness to join the TPP in 2013, but instead focused on the Korea-China FTA.

One official at the Blue House told the JoongAng Ilbo that it was Washington that was ambivalent about Seoul coming into TPP negotiations, due mostly to the large deficit in auto trade with South Korea from their own FTA.

However, experts say the TPP could act as a bulwark against China for Japan and the United States, particularly with its improved security alliance.

Sohn Yul, the dean of the Graduate School of International Studies at Yonsei University, said Seoul should try to keep up a neutral appearance in the face of the United States and China, as though it is calculating its economic interests and not potentially leaning to one side or another.

“Japan and the U.S. now have taken on the strategy to forge both an economic and security alliance. In face of that, Korea should state that it will decide whether to join the TPP based on the pursuit of pure economic interest.”

Kim Han-kwon, a professor at the Korea National Diplomatic Academy, added that it was important for Korea to negotiate well with Japan once it enters into talks to join the TPP, saying Seoul would be at a disadvantage as a latecomer.

“Korea needs to win support from the U.S. for negotiations with Japan during talks [on Oct. 16 in Washington] and narrow down differences with Japan at the trilateral summit afterward.”

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