11 countries, including Japan and Australia, officially signed the Trans-Pacific Partnership (TPP) Agreement in Santiago, Chile on March 8 (local time). The other nine countries are Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. The agreement becomes effective once at least six of the 11 countries ratify it.
The United States refused to participate in the agreement. Still, the content of the previous TPP Agreement has been maintained to the maximum extent possible with the agreement renamed Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The 11 countries account for 13% of the global total GDP, which is relatively lower than NAFTA’s 28% and RCEP’s 31%. However, the ratio goes up to 37% and the partnership becomes the largest economic bloc in the world if the U.S. takes part. Then, their ratio in the global trade volume rises from 15% to 26%. U.S. President Donald Trump said late last month that he was willing to resume negotiations for participation.
In the meantime, the South Korean government is planning to decide on its participation within this year. South Korea has entered into bilateral FTAs with nine out of the 11 countries so far, with the exception of Japan and Mexico.
The South Korean government’s prudence is because of Japan. South Korean exporters can be significantly affected once Japanese products such as automobiles and basic materials and components enter the local market with lower tariffs. Last year, South Korea’s trade deficit with Japan amounted to US$28.3 billion.