The government on Friday more or less decided to join the U.S.-led Trans-Pacific Partnership, a free-trade pact of 12 Pacific-rim countries including Australia, Japan, Mexico, Singapore and Vietnam. Talks about the TPP were originally scheduled for conclusion by the end of this year, but it looks like only a tentative agreement will be announced in a meeting of trade ministers early this month because they failed to agree on the details.
The U.S. has asked Korea many times to join the TPP, but the government avoided committing itself. Korea has already forged free trade agreements with the U.S. and the EU and opening markets further through the TPP did not seem to offer that many additional benefits. Moreover, the TPP was perceived by some as a U.S. strategy to encircle China and keep it in check, and China is Korea's No. 1 export destination, netting Korea a hefty trade surplus of US$53.5 billion.
Korea's decision to join in the TPP came as tensions with China mounted after Beijing unilaterally declared a new air defense identification zone in the East China Sea, which overlaps with a huge swath of Korea's zone.
Japan joined TPP talks in July when its territorial dispute with China over the Senkaku or Diaoyu Islands intensified. It risks opening up its agricultural market, shouldering potential political repercussions and raising the chances of suffering losses in its financial and labor markets, because it places a high priority on its alliance with the U.S.
Korea's decision to join the TPP was largely unavoidable given the nature of its economy. But it now shoulders a larger political burden since the decision comes at a time when U.S.-China diplomatic tensions have intensified. Seoul must do everything it can to minimize any misunderstanding with China.
By joining the TPP, Korea faces the prospect of abruptly opening the agricultural market and further liberalizing the insurance and foreign exchange markets as well. This requires careful steps to minimize the damage.
But due to its lack of natural resources, Korea has had to embrace an open-market policy in order to tap into overseas markets for exports and adopt foreign capital and technologies for further development. If the Korean economy is to emerge from its low-growth mode and achieve robust growth again, it needs to compete with high value-added products and services geared toward overseas markets. It cannot afford to be left behind in talks to establish a new framework for global trade.