TPP Participation

 

The Korea Economic Research Institute said that Korea needs to hurry to accede to the Trans-Pacific Partnership (TPP) because its components and materials industry could be subject to an export loss of US$13.26 billion for 10 years after the implementation of the TPP when Korea is excluded from it.

According to its report, its value-added exports to the United States are estimated to decline by US$11.3 billion during the period, while those to Japan are predicted to record a decrease of US$1.96 billion. The total of US$13.26 billion is equivalent to 17.9 percent of the industry’s exports to the TPP region.

By industry, the loss of exports to the U.S. is estimated to be US$440 million for the textile industry, US$1.71 billion for chemicals, US$1.91 billion for steel, US$710 million for machinery, US$710 million for electrical, US$1.45 billion for electronics and US$4.37 billion for transport machinery. When it comes to exports to Japan, it is forecast to reach US$420 million in textiles, US$1.15 billion in chemicals, US$390 million in steel, US$240 million in electrical and US$480 million in electronics.

In addition, the exports to the TPP region based on Korean enterprises’ local manufacturing corporations in Vietnam are likely to fall by US$620 million, and those utilizing global supply chains in Mexico are expected to decline by US$290 million a year.

“The industry has become more and more dependent on global value chains since 2008 with regard to the export of textiles, chemical products, machinery, electrical and electronics products and auto parts,” said Chonbuk University professor Choi Nam-seok, continuing, “Therefore, the industry cannot but be affected when Korea is excluded from the Asia-Pacific supply chains to be formed by the TPP.” He added, “Although Korea has signed free trade agreements with the 10 countries except for Japan and Mexico, Korean companies are likely to lag behind those associated with the TPP in terms of cost competitiveness in that the former cannot enjoy the latter’s uniform rules of origin.”

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