TPP’s details don’t turn off SeoulThe Korean government heaved a sigh of relief after terms of the Trans-Pacific Partnership (TPP), which Korea has yet to decide to join, were unveiled Thursday afternoon since the market openings are similar to those in the Korea-U.S. Free Trade Agreement (FTA).
The Ministry of Trade, Industry and Energy said it will take about a month to analyze the TPP’s precise impact on the Korean economy before finalizing a decision on whether to join or not.
On Thursday afternoon, New Zealand unveiled the final draft of the mega-FTA for the first time. The details were also to be released by 11 other countries in the pact, but New Zealand had the earliest time zone.
It was unclear whether the Korean government would immediately announce its intention to join the TPP by the end of the year.
“The TPP agreement seems to have reached a similar level of liberalization as the Korea-U.S. FTA in general,” said Kim Hak-do, an assistant minister at the Trade Ministry, at a press briefing Thursday afternoon. “But the TPP includes some new factors that will become global standard for free trade, such as a standardized place of origin rules, limiting excessive protectionism for state-run companies and eased rules on e-commerce.”
The Korea-U.S. FTA requires Korea to eliminate tariffs on 99.8 percent of its all exported products to U.S. market, which does not include some agricultural products and rice. The tariffs on 100 percent of U.S. products in Korea are eliminated over 25 years.
The TPP, a 30-chapter agreement, is designed to eliminate tariffs on 95 to 100 percent of export products over 30 years.
Among the 12 members, 10 - the United States, Japan, Canada, New Zealand, Chile, Peru, Singapore, Malaysia, Brunei and Vietnam - vowed to open 100 percent of their markets. Australia and Mexico were allowed to open their markets about 99.6 to 99.8 percent to avoid negative impacts on their domestic economies.
Japan was not able to get its automobiles’ tariffs reduced drastically, as the United States tried to protect its local automakers. In return, Japan was able to get rice and other agricultural products completely excluded from the tariff elimination lists.
Japan currently exports passenger autos with a 2.5 percent tariff to America. The tariff will stay the same for the first 15 years of the TPP and then drop an average 0.2 percent every year over the next 10 years.
Korean automobiles are expected to see tariffs completely eliminated starting January 1, 2016, which is the fifth year of the Korea-U.S. FTA.
Analysts advise Korean carmakers strive for competitiveness against Japanese autos because Korean-brand autos this year showed a relatively low sales growth compared to the overall auto sales growth in the U.S.
The American domestic auto market has steadily expanded since 2010 in both sales and production.
The American auto market saw total sales of 17.1 million cars by September this year, up by 4.1 percent year on year, while production also rose by 4.9 percent year on year, according to the Korea Trade-Investment Promotion Agency (Kotra).
Korean auto sales rose only 0.9 percent year on year to $4.4 billion.
The TPP agreement specifies that members should not grant excessive benefits to state-run companies.
BY KIM JI-YOON [email@example.com]