Some trade-related agencies and businesses in South Korea seem to be ill at ease over the nation’s absence from talks for the Obama administration-initiated Trans-Pacific Partnership, a kind of regional economic bloc.
Concerns are being raised after 12 potential members — including Japan, Vietnam, Australia and the U.S. — on Thursday signed a deal to launch the TPP.
Officials from some local agencies cited research predicting that Korea will see its exports and gross domestic product decline 1 percent and 0.3 percent, respectively, by not participating in this entity.
In comparison, the report expects Japan’s export and GDP to grow by 23 percent and 2.5 percent on the back of the Asia-Pacific bloc.
Based on the report, which is by a foreign research institute, this scenario is likely to happen in 2030, assuming that the TPP takes effect in 2017. However, without detailed analyses of each of Korea’s industrial segments and the nation’s free trade pacts, the comparison to Japan holds little significance. Hence these projected figures currently appear vague.
Korea has already lifted and eased some tariff barriers and has further plans to do so. It has 53 major trade partners via free trade agreements made over the past decade. Korea’s trade policy, which is based on neoliberalism, began in April 2004, when the nation implemented its first free trade agreement with Chile.
So far, there have been positive and negative effects from such bilateral pacts.
The country is also a core member of the China-led Asian Infrastructure Investment Bank. China is not participating in the TPP talks. The U.S. and Japan downplay the AIIB and its future role on the global stage.
The two economic structures function as key points in the political game for hegemony between the world’s top two economies. And it is undeniable that Korea has no choice but to fully reflect suggestions from the G2.
The Park Geun-hye administration appears to be taking a wait-and-see approach, as it is not too late despite the 12 TPP negotiators’ recent signing in New Zealand. While the AIIB has launched, the TPP requires each members’ parliamentary ratification to go into effect.
There is no need for haste. The outlook for ratification is uncertain in the U.S., never mind the 11 other potential members. There is little possibility that President Barack Obama will gain approval of Congress before his tenure expires in January 2017.
Apart from politics between the U.S. and China, local policymakers should calculate the estimated economic gains and losses from a participation in the TPP via prudent research.
Over the past 10 years, the Korean government has experienced strong criticism from a large proportion of citizens over making too many concessions during FTA negotiations with the U.S.
It is not the blind worship of neoliberalism but the future competitiveness of Korean industries that will guarantee brisk exports and robust GDP growth.
The international economy has extremely uncertain territory amid the unpredictable direction of crude prices, U.S. monetary policies and China’s economic slowdown.
Korea’s primary concern should be close monitoring of the global foreign exchange market and raw materials market in the coming months.
