October 06, 2015 13:39
The Trans-Pacific Partnership, a broad free trade deal covering the U.S. and 11 other Pacific Rim nations, was concluded on Monday after marathon negotiations in Atlanta, Georgia finally produced agreement over pharmaceutical patent protection, dairy products and tariff cuts on automotive parts.
The combined GDP of the 12 TPP member nations account for 40 percent of global GDP. Once it goes into effect it will launch the world's largest economic trading bloc, 1.5 times larger than the EU.
The TPP has been led by the U.S. and Japan to counter China's growing economic might, but opponents are concerned about the elderly economic doctrines of scorched-earth capitalism and the favoring of big business they feel it represents.
Korea's is highly dependent on trade and needs to spearhead market-opening measures. But after two years of twiddling its thumbs, Seoul has lost its immediate opportunity to join.
The chances of TPP membership at first looked bright when in early 2013 Park Geun-hye became president with an explicit pro-business agenda. But the Park administration took a tepid approach to the TPP, citing disagreements between government ministries and fierce opposition from civic groups and leftwing politicians. Only in late November that year did deputy prime minister Hyun Oh-seok finally decide to launch a preparation team for negotiations.
By then the U.S. Trade Representative was no longer keen for Seoul to enter the talks, saying it had better wait until existing member nations wrapped up negotiations. Unlike Korea, Japan stood right on the mat as the talks started in March of 2013 and ended up spearheading the initiative.
Once the TPP goes into effect, Korea will lose some of the benefits it enjoyed as a cheerleader for free-trade deals. Instead, Japan, which had previously been seen as cautious, will now enjoy the benefits of expanded trade with Australia, Mexico, the U.S. and other TPP member nations.
Yet even now some officials here remain concerned about an FTA with Japan. They fear it would deal a severe blow to Korea's automotive industry by eliminating the eight-percent tariff on Japanese cars that has so benefited the domestic industry. There are also fears of fierce protests by farmers.
But Korea's economy has actually grown stronger by opening its market further and encouraging global competition with foreign multinationals. Free trade and competition are vital to restructuring weak businesses and nurturing promising ones.
When Korea opened its doors in the late 1990s to Japanese cultural imports, there was panic in the press that the country would somehow be re-colonized by Japanese media and pop culture. But if Korea had not opened its markets back then, it would not later have been able to turn the tables and enjoy the global success of pop stars like Psy or Girls' Generation.
The Korea Institute for International Economic Policy says Korea's real GDP will grow 1.7 to 1.8 percent 10 years down the road if it joins the TPP trade pact, but if it does not, GDP will shrink 0.12 percent.
That puts opponents of the Washington-led deal here in a difficult position, especially since Chile, Malaysia, Vietnam and other countries with smaller economies did join the TPP.
If Korea is to join the ranks of the world's advanced economies, it needs to stop dragging its feet over opening its markets out of fear of opposition from various interest groups. It must take the initiative by further opening the agricultural market and streamlining regulations on intellectual property and tariffs and customs. If it is to pull its economy out of the low-growth trap, additional market-opening measures are essential and unavoidable.
Korea should join the TTP as soon as possible. The government must stop dragging its heels.
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