Shifting Export Landscape

A cargo ship in Busan Port.
A cargo ship in Busan Port.

 

Japan’s accession to the Trans-Pacific Partnership (TPP) is predicted to intensify the competition between Korean and Japanese companies in the United States, with the latter already getting the inside track with the ongoing weak yen.

According to the Ministry of Trade, Industry & Energy, tariffs on 67.4 percent of the industrial products exported from Japan to the United States are expected to be immediately eliminated once the TPP becomes effective, and the percentage goes up to 99.9 percent for 30 years to come. “According to the KORUS FTA, 96.9 percent of the products exported from Korea to the United States become tariff-free as of Jan. 1 next year, which means the economic effects following Japan’s accession to the TPP are nothing to worry about,” the ministry explained.

Still, not a few experts are saying the other way around, in that Korea and Japan have similar export structures and have continued to vie with each other for a long while in the U.S. market. For both Korea and Japan, the top three export items regarding the U.S. market are automobiles & auto parts, electrical & electronics equipment, and consumer electronics & machinery. For Korea and Japan, the exports of these items account for 66.8 percent and 69.8 percent of the total exports to the United States, respectively.

The two countries have an export similarity index of more than 50 percent when it comes to transportation machinery, auto parts, machinery, optical & medical equipment, and electrical devices, and Japan has a comparative advantage as far as the four of them excluding auto parts are concerned.

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