Putting plans into actionDeputy Prime Minister for Economic Affairs Hong Nam-ki expressed the will to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). In a meeting Monday with related government ministers, Hong, who also serves as finance minister, said the government will gather public opinions and start discussions on joining the pact. “Based on the results, the government will take the steps required to participate in the trade deal,” he said. However, as the Moon Jae-in administration has less than five months left before its term expires, Hong’s remarks mean Korea’s joining will be delayed until after the March 9 presidential election.
Last December, President Moon ordered a consideration of Korea’s participation in the trade deal. Hong also stressed the need to determine whether to join it, as early as November. If a country wants to be a member of CPTPP, it requires a unanimous endorsement by its members, never mind the many tricky conditions for participation. As the process usually takes more than two years, Hong’s remarks are likely aimed at weighing the response of local farmers who strongly oppose the move.
The CPTPP is a multilateral free trade agreement (FTA) launched by Japan and other Pacific Rim countries in 2018 after the United States under Donald Trump declared to withdraw from it. Led by Japan, the CPTPP has 11 members; Mexico, Australia, New Zealand, Singapore, Brunei, Malaysia, Vietnam, Peru, Chile. Its level of opening is higher than other FTAs. After China and Taiwan applied for membership in September, the strategic importance of the CPTPP with 690 million population grew bigger. Total trade volume of its members accounted for 15 percent of world trade in 2019.
CPTPP members can enjoy benefits from broader regional markets and intensified supply networks through the FTA. In particular, member countries can reduce their reliance on China for exports. If they did not sign FTA agreements with Japan and Mexico, they can still have the same effect from joining the CPTPP. If Korea does not join the partnership, its companies can receive disadvantages in importing raw materials and parts at cheaper prices.
Korea is a Top 10 trading country, but took a passive approach to joining the CPTPP primarily for fear of the impact on the agricultural sector. But the government cannot delay it any more. If the country isolates itself from a multipartite FTA in the region, our companies will face an uphill battle in trade. If Korea joins the trade deal led by Japan, it can help improve Seoul-Tokyo relations too. The time has come for the government to put its plan into action before it’s too late.