TPP vs RCEP
According to multiple government officials on November 29, the South Korean government unveiled its interest in joining the Trans-Pacific Partnership (TPP), an expanded version of the 2005 Trans-Pacific Strategic Economic Partnership Agreement (TPSEP). This move is regarded as the shift of the Korean government’s stance from a cautious attitude to willingness to join it.
The TPP, which aims to abolish tariffs and integrate economies in the Asia Pacific region by 2015, has been joined so far by 12 countries, including the US, Japan, Australia, Peru, and Malaysia.
The government has refrained from expressing its official stance on joining the TPP because it might not come to fruition, and it needs to gain feedback from public opinion. Another factor was that Korea has either signed or will sign free trade agreements (FTAs) with a number of countries, and thus has no reason to hurriedly join the TPP.
Actually, the US and China have competed with each other in Asia by leading the TPP initiative and the Regional Comprehensive Economic Partnership (RCEP), respectively. It is forecast that the TPP will move more quickly and will wield more influence than the RCEP. Accordingly, South Korea’s participation in the TPP is expected to negatively impact its relationship with China, which is the largest market for Korean export products.
Consequently, the possible impact that Korea’s participation in the TPP will have on the free trade agreement (FTA) under negotiations between Korea and China has received some attention. The two countries recently started the first talk of second phase negotiations to discuss what items and how widely the two countries will open their markets.
Some experts forecast that China cannot help but to join the TPP. China initially criticized the TPP as a move to “isolate China,” but then actually showed a forward-looking attitude by unveiling its interest in participating in the TPP in July during the economic strategy dialogue held between the US and China.
In the meantime, China is reportedly considering participation in the TPP. At a press conference on November 30, Deputy Prime Minister and Finance Minister Hyun Oh-seok said at an Economy-related Ministerial Meeting on November 28, “China has been cautious about taking part in the Trans-Pacific Pact, but now swung to a positive position in participation,” adding, “The change in China’s stance is one of the reasons that Korea shows interest in becoming a member of the TPP.”
Minister Hyun said, “We need to take initiative to reveal our interest in the TPP while we keep our negotiations on the Korea-China and Korea-Japan FTAs,” adding, “The FTA will cover a wider range of issues than the TPP.” Hyun’s remark is interpreted as his firm will for Korea’s comprehensive free trade policies with the US, Japan, and China.
With the participation of Korea and China, the members of the TPP will account for 51 percent of the global economy in terms of Gross Domestic Production.
However, China’s participation in the TPP would be difficult for the time being, as the TPP pursues higher and more comprehensive free trade. Accordingly, it creates questions about just what kind of new trade diplomacy China will engage in through the FTA with Korea and that among Korea, Japan, and itself.