South Korea will begin the application process to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the country’s finance minister said on Monday, after China’s bid to the regional trade pact assuaged Seoul’s fears of upsetting its biggest trade partner.
Hong Nam-ki said on Monday that South Korea could “no longer discuss the issue just within ministries because of the recent active changes in the economic orders in the Asia-Pacific region, such as the applications of China and Taiwan to join the CPTPP”.
Earlier, Kwon Chil-seung, South Korea’s minister for small and medium enterprises, told the Financial Times that concerns within the government about joining the CPTPP had been resolved, paving the way for the country’s application.
“The SME ministry and agriculture ministry had been relatively cautious, but a decision has been made internally at a collective government meeting to join the CPTPP,” he said.
“The time has come,” Korean trade minister Yeo Han-koo told the FT. “Korea has a lot to offer to the CPTTP as a high tech industrial powerhouse in areas like semiconductors and batteries, among others.”
Yeo added that the country’s relative success in combating the coronavirus pandemic had highlighted its importance to global supply chains.
“We never shut down, we never locked down — Korean businesses have established themselves as reliable producers and partners,” he said.
The CPTPP was signed in 2018 as a successor to the Trans-Pacific Partnership, a trade agreement negotiated by former US president Barack Obama and designed to limit Beijing’s growing economic and political influence in the region.
Donald Trump withdrew the US from the pact in 2017. The TPP evolved into the CPTPP, which was signed the following year but does not include the US.
South Korea had been hesitant about joining either agreement, in part to avoid damaging relations with Beijing.
Ministers have also been reluctant to provoke important domestic constituencies ahead of a presidential election in March. South Koreans working in the agriculture, fisheries and SME sectors have expressed opposition to the pact because of fears of intensified foreign competition.
China itself applied to join the CPTPP in September, a day after the US, UK and Australia announced a new military partnership designed to counter Beijing’s military assertiveness in the region. Taiwan applied to join the CPTPP less than a week later.
“The process seems to be held up because of the government’s reluctance to take risks with further market opening, and with the presidential election just three months away,” said Cheong Inkyo, a trade expert at Inha University.
“But its sense of urgency has increased now that China and some other countries submitted applications.”
A senior diplomat from a country that is a party to the CPTPP added: “The Chinese and Taiwanese applications changed the dynamic.”
According to a 2019 policy brief published by the Peterson Institute for International Economics, a Washington-based think-tank, South Korea would gain $86bn annually from membership.
“South Korea cannot keep watching trade diversion to other countries and be excluded from the global supply chain,” said Choi Byung-il, a former Korean trade negotiator and professor at Ewha Womans University in Seoul.
A potential obstacle for South Korea is its difficult relations with Japan.
The countries are embroiled in a dispute at the World Trade Organization over export controls that Tokyo imposed on South Korean semiconductor components in 2019 amid a fight over Japan’s wartime occupation of Korea.
“There are likely to be mixed feelings in Japan about any South Korean application to join the CPTPP,” a Japanese official told the Financial Times.
South Korea’s decision to join the agreement follows a broader shift towards multilateral trade agreements, which the country has traditionally chosen not to join. Seoul is in the process of ratifying the Regional Comprehensive Economic Partnership, a separate regional agreement led by China that includes 15 Asian countries.
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