Trans-Pacific Partnership
There was a sharp division of opinions over the Trans-Pacific Partnership (TPP) at the first hearing, organized by the Ministry of Trade, Industry and Energy and held at the COEX Convention Center in Seoul on November 15.
With the government seeking to participate in the TPP, academic circles are split over the impact on Korea’s economy.
Kim Young-gui, head of the regional trade team at the Korea Institute for International Economic Policy (KIEP), said, “Our participation in free trade will bring about a 2.5-2.6% GDP growth for 10 years, after the agreement goes into effect. Otherwise, Korean GDP is expected to shrink by 0.11-0.19% during the same period.” The KIEP researcher estimated that Korea’s involvement would result in an increase in exports of automobiles, refined petroleum products, and finally textiles.
Other people voiced opposition to the trade pact on the grounds of few economic benefits. Jung In-kyo, a professor of economics at Inha University, commented, “I don’t think that our participation in the TPP will generate big gains. Rather, it will become a big burden on society.” The professor added, “The economic benefits of the free trade agreement will be confined to only five non-FTA countries, including Japan. However, free trade with Japan is likely to have a negative impact on our economic growth. Furthermore, it is predicted that gains from free trade with the other four countries will be insignificant. So, the overall GDP growth of our country is estimated to be merely 0.1-0.2%.”
Proponents and opponents were also at loggerheads over the issue at a forum attended by industry representatives. The textile industry was in favor of Korea’s participation while the agricultural industry was strongly against the idea.
Some said that in order to participate in the TPP negotiations, the government should strengthen bases for small and medium-sized business and strongly urge Japan to open up its market. Ahn Chung-young, professor at Chungang University, pointed out, “To be a TPP member country, Seoul ought to demand that the US and Japan open their domestic markets to foreign investors, including agricultural markets and service markets.”
The nominal GDP of 12 countries participating in the TPP negotiations for 2011 totaled US$26.6 trillion, representing 38.0% of the total GDP. With Japan’s membership this year, the TPP has been augmenting its power in full swing. Originally, the TPP negotiations were scheduled to be finalized by the end of this year, but members are likely to reach an agreement on a free trade deal after 2014, due to many unresolved issues.