The Trans-Pacific Partnership (TPP), the world’s largest free trade agreement, was officially signed in New Zealand on Feb. 4. In October last year, TPP member countries hammered out the deal in a trade ministers’ meeting held in Atlanta, the U.S. The TPP now has 12 participating countries: the U.S., Canada, Japan, Vietnam, Mexico, Chile, Peru, Australia, New Zealand, Malaysia, Singapore and Brunei.
Now, the TPP member countries will look to win domestic approval. It is expected that it will take about two years for the agreement to take effect after the finalization of all procedures.
The TPP led by the U.S. accounts for about 40 percent of the world economy. Some experts forecast that the enactment of the TPP will reduce Korean exports by about 1.0 percent and Korea’s GDP by 0.3 percent in the long term, dealing a heavy blow to the Korean economy.
“TPP Official Signing,” a report published by the International Trade Institute of the Korea International Trade Association on Feb. 4, forecasts that the effectuation of the TPP will chip away at Korea’s benefits from the KORUS FTA and exported products between TPP member nations will replace those between Korea and TPP member countries, having mid- to long-term negative impacts on the Korean economy.
In particular, if Japan with a big investment in TPP member nations gives a boost to its production by bolstering its production networks within the TPP system, it may weaken Korean companies’ competitiveness, the report claims. By quoting overseas research results based on the TPP agreement, the institute expects that if the TPP takes effect in 2017, in 2030, TPP member nations’ GDP and exports will swell 0.5 to 8.1 percent and 4.7 to 30.1 percent, respectively, compared to the case where the TPP does not come into effect.
They also predicted that in 2030, Japan’s GDP and exports will grow 2.5 percent and 23.2 percent, respectively, while non-TPP member Korea’s GDP and exports will edge down 0.3 percent and 1.0 percent.