As China Eyes CPTPP
The Moon Jae-in administration has officially begun to consider Korea’s joining the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).
Analysts say that Korea will no longer sit on the fence amid the U.S.-China conflict as the inauguration of the Biden Administration is around the corner.
In fact, Chinese President Xi Jinping made a surprise remark at the Asia-Pacific Economic Cooperation (APEC) summit in November that China will actively consider joining the CPTPP. China made a preemptive move to lead multilateral trade ahead of U.S. President-elect Biden, who had advocated multilateralism and the restoration of free trade, analysts say.
The shift in China’s stance has prompted the Korean Presidential Office to start discussion with the Korean government on joining the CPTPP. The Korean government does not need to be very careful not to upset China as the Beijing government has started moving to join the CPTPP.
Korea's exports to CPTPP member countries stood at US$133.6 billion as of 2017, accounting for 23.3 percent of its total exports. Korea’s imports from them touched US$125.4 billion, taking up 26.2 percent of the total in the same year.
The scope of Korea’s FTA with Japan is also expected to expand. Korea has already indirectly signed an FTA with Japan through the Regional Comprehensive Economic Partnership (RCEP). But tariff reduction between the two countries through the RCEP deal remains at a low level of 83 percent, which is lower than the levels reached in Korea’s trade with China, Australia and New Zealand (91 to 100 percent) as well as ASEAN member countries. However, the tariff reduction level via the CPTPP is 95 percent with Japan and 100 percent with New Zealand, Malaysia, Brunei and Singapore.
In addition, Korea’s accession to the CPTPP could upgrade trade relations with countries such as Vietnam and Malaysia, which have already signed FTAs with Korea. In particular, the most notable effect of joining the CPTPP is that Korea will sign the first free trade agreement with Mexico, Korea's 15th largest trading country.