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World’s Third Largest Economic Bloc Emerges Excluding S. Korea
11-country Asia-Pacific Trade Group Launched
World’s Third Largest Economic Bloc Emerges Excluding S. Korea
  • By Jung Suk-yee
  • December 31, 2018, 10:22
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The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), an 11-country Asia-Pacific trade agreement, takes effect on Dec. 30.

As the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), a new 11-country Asia-Pacific trade agreement, took effect on Dec. 30, there is a growing public outcry that South Korea also needs to take part in the new agreement as soon as possible and accelerate signing free trade agreementa (FTAs) with other countries.

The CPTPP is a trade agreement between Japan, Canada, Australia, Mexico, Singapore, Malaysia, Chile, Vietnam, Peru, New Zealand and Brunei. Although the United States has not joined the agreement, the economic block now accounts for 15.2 percent of the global trade and 23.3 percent of South Korea’s exports as of last year. The 11 countries also take up 13.9 percent of the global gross domestic product (GDP) and 15.2 percent of the global trade volume. This is the third largest economic bloc after the United States-Mexico-Canada Agreement (USMCA) and the Regional Comprehensive Economic Partnership (RCEP).

Experts said that South Korea will not suffer great damage as the country has already signed FTAs with nine countries, except for Japan and Mexico, among the CPTPP member countries. With the CPTPP coming into effect, however, the market opening effect that South Korea has enjoyed in these countries will be eaten away to a certain degree. This is because Japan, which is South Korea’s export competitor, will be able to compete with South Korea under equal conditions in these countries.

The CPTPP removes tariffs on merchandise trade between member countries immediately or by stages for up to 21 years, having a higher openness than other agreements. In particular, for automobiles, which are one of South Korea’s main export items, Australia has immediately removed 5 percent of tariffs on cars and Canada has decided to eliminate 6.1 percent of tariffs on cars five years later. Vietnam will also phase out 70 percent of tariffs on vehicles over the next 10 years.