Korea should go for TPP: experts
Trade analysts gathered in Seoul on Tuesday to discuss Korea, the TPP and a U.S.-led global trade order at the 2015 Seoul Conference on Trade & Industry hosted by the Ministry of Trade, Industry and Energy and Korea International Trade Association.
“Korea has to be part of the TPP, and if it doesn’t take part, it risks losing its position within the regional supply chain,” said Charles Finny, a partner with Saunders Unsworth Limited of New Zealand. Korean manufacturers may fall behind in competition against U.S., Japan and 10 other pacific-rim country founding members if it doesn’t join.
“Korea should be considered to belong in a different category, as it has gone further in meeting TPP standards and disciplines through the KORUS [Korea-U.S. FTA] and other bilateral FTAs it has with 10 TPP members,” Finny added.
Joining the TPP would offer Korea greater market access to markets that Korea doesn’t have bilateral FTAs with, such as Japan and Mexico, and offer more favorable trade conditions due to its rules of origin system, said Peter Petri, an international finance professor at Brandeis University and a senior fellow at the East-West Center.
In the TPP’s rules of origin system, all raw materials and production and assembly processes happening in the TPP member countries qualify for tariff elimination. So, manufacturers of TPP member countries can reduce production costs by simply choosing to use raw materials or have factories in other members countries and save on tariffs.
The TPP is projected to increase garment and electronics exports from Vietnam to the U.S. for such reasons, Petri mentioned.
Experts also warned that Korea must be ready to pay the price of joining the TPP because of stipulations that don’t exist in any other of Korea’s bilateral FTAs.
Finny emphasized that the TPP has tougher rules on subsidies for protected local industries, state-run enterprises and any other activities that may deter fellow TPP members’ market access.
In relationship to Japan, Korea is likely to face harsh competition in agricultural products, said Yukiko Fukagawa, a political science and economics professor at Waseda University. Aside from rice, beef, dairy and wheat - which were excluded from the TPP tariff elimination list - Fukagawa said vegetables, fruits and seaweed are products that will face harsher competition.
BY KIM JI-YOON [email@example.com]