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S. Korea's move to join TPP
Publication Date : 02-12-2013
South Korea, ending a protracted deliberation process, is near to joining negotiations on the Trans-Pacific Partnership, a multilateral agreement to liberalise trade in the Asia-Pacific. It said last Friday it would make a final decision after talks with the United States, Japan, Canada, Australia and eight other negotiating partners.
The forthcoming consultations are little more than a formality, given that Korea, the eighth-largest trader in the world, has long been urged by the United States to join the negotiations on lowering trade barriers among 12 nations that make up 38 per cent of the world’s economy. Korea, which already has free trade agreements with the United States, the European Union and other economies, has had to weigh potential gains from the TPP against potential losses.
Korea has detractors both domestically and abroad. Farmers are at the forefront of the domestic groups that are against the proposal to promote regional economic integration through the TPP. The opponents are worried about the wider opening of the domestic agricultural market and the lowering of protective barriers, both tariff and non-tariff.
Before making a final decision, Korea has had to take caution, as the TPP is perceived by China to be a US-led strategy to encircle the second-largest economy in the world. Korea has needed to consider the potential impact its membership of the TPP would have on its relations with China, its largest trading partner. Moreover, it is in the process of negotiating a free trade agreement with China.
But it is hard for Korea to ignore the potential benefits. According to one study, the lowering of tariff barriers alone will raise its gross domestic product by 2.5 per cent or higher in real terms by 2025. Such huge benefits are reportedly attractive to China as well.
Korea, a nation poor in natural resources, has no choice other than to embrace the new trade order that is emerging from the TPP. Korea needs to expand its trade of goods and services and encourage foreign direct investment by joining what is shaping up to be the most powerful trade bloc in the world, if it wishes to pull itself out of the low-growth mode. While pursuing membership to the TPP, however, it will have to make efforts to resolve conflicts with its detractors.