October 07, 2015 11:31
The government is facing a barrage of criticism after Korea was left out of the Trans-Pacific Partnership, a broad free trade deal covering 12 Pacific Rim nations concluded Monday.
Critics say Korea cannot afford to ignore the world's largest trading bloc led by the U.S. and Japan, which are also central players in the security and economic alliance in Northeast Asia.
The government says it is now ready to join the controversial trade pact despite earlier foot-dragging that meant it was left out of the main negotiations. Finance Minister Choi Kyung-hwan on Tuesday said he will consider Korea's participation in the TPP in "any form."
But the conditions the government cited to explain its initial reluctance have not changed. On the contrary, Korea will probably have to open up its agricultural market further as the founding members demand greater concessions from latecomers.
Automakers and precision machinery manufacturers who still lag behind Japan in terms of technology are also opposed for fear of Japanese imports flooding the market here. And Korea would have to wait until after mid-2017, when lawmakers of the 12 original member nations ratify the pact.
Washington is noncommittal. Deputy U.S. Secretary of State Antony Blinken met with Foreign Minister Yun Byung-se and said he welcomed the opportunity to discuss the matter with the Korean government.
Economists said TPP membership is not an option but a must for an export-dependent country like Korea. Korean companies currently stand to lose out to Japanese rivals in selling products to TPP member nations, whose combined GDP is equivalent to 40 percent of the world's. Seoul could also end up isolated in the new U.S. led economic order taking shape in the Asia Pacific region.
Ahn Duk-geun at Seoul National University said, "TPP member nations can lower their tariffs further and open their markets further to other members, and the U.S. and Japan are likely to push for further slashing of investment regulations in the bloc over the coming years. If we don't take part in this process, we could have big trouble on our hands."
But auto industries here are wary of unfettered competition. "If the eight-percent tariff on Japanese car imports is abolished because of the TPP, Japanese cars will end up dominating the domestic market," said one auto industry insider. Opening up the agricultural market is likely to trigger massive protests, especially from rice farmers.
Choi told lawmakers on Tuesday, "It is the government's policy to exclude rice from the list of concessions when joining the TPP." But Japan did end up opening its rice market in the final stage of TPP negotiations.
Experts say Korea needs to think carefully about the timing of its participation in the TPP and plan an effective negotiating strategy. At present, Colombia, Indonesia, Taiwan, Thailand, and the Philippines also wish to join the TPP.
Park Chun-il at the Korea International Trade Association said, "Korea already has bilateral free trade agreements with 10 of the 12 TPP countries, excluding Japan and Mexico. Rather than holding joint negotiations with all of them, it might be more advantageous for Seoul to hold one-on-one negotiations with the original member nations."
Choi batted away criticism that Korea lost a valuable opportunity by dragging its heels at the onset. "When Washington announced its participation in the TPP in 2008, Korea had already signed an FTA with the U.S., while FTA negotiations were being held with China, so the Lee Myung-bak administration decided it would be better to focus on ongoing talks," he said.
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