As protectionism from the United States and supply chain restructuring intensify, the South Korean government is reconsidering its potential membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This decision comes amid a growing need to secure new markets and expand South Korea's position in the rapidly changing global trade landscape.
However, the high level of market openness required poses a significant challenge, particularly in addressing the agricultural sector's concerns regarding potential backlash.
According to relevant government departments, discussions are ongoing about the necessity of joining the CPTPP and its impact on various industries. The aim is to secure new markets in Mexico and ASEAN while accelerating exports of consumer goods centered around K-content.
The CPTPP is a multilateral free trade agreement led by Japan, which restructured the Trans-Pacific Partnership (TPP) after the United States withdrew. Currently, it includes Japan, Australia, Canada, Mexico, Vietnam, and most recently, the United Kingdom, bringing the total to 12 member countries.
The combined GDP of CPTPP member countries is $15.9 trillion, accounting for 14.3% of the global GDP. The average tariff elimination rate is 98.8%, with exports among member countries projected to reach $618 billion by 2024, reflecting an annual growth rate of 3.2% since the agreement's implementation.
The renewed emphasis on joining the CPTPP stems primarily from the need for market diversification. South Korea has already established bilateral and regional free trade agreements (FTAs) with most CPTPP member countries. However, it lacks a trade agreement with Mexico, meaning that joining the CPTPP could lead to tariff reductions and integration into regional value chains. Last year, South Korea's exports to CPTPP member countries totaled $164.8 billion, while imports reached $164.3 billion.
The rapid expansion of the CPTPP is also a source of concern for the South Korean government. Costa Rica has nearly completed its membership negotiations and is expected to become the 13th member next year. Uruguay is currently in negotiations, while Indonesia, the United Arab Emirates, and the Philippines have begun preliminary discussions. Additionally, countries like Uruguay, Taiwan, and Ukraine, which do not have separate trade agreements with South Korea, have submitted applications to join.
If Costa Rica becomes a member, it could complicate South Korea's negotiation structure, as all existing member countries must agree to new entrants. This means that if Costa Rica officially joins, South Korea will have one more country to seek consent from in future negotiations. There are concerns that remaining outside the CPTPP amid its ongoing expansion could lead to significant opportunity costs in shaping trade norms and participating in regional supply chains.
The Korea International Trade Association's International Trade and Economic Research Institute stated in a report that not participating in the CPTPP, which leads the advancement of trade norms reflecting the changing trade environment, could result in future opportunity costs. It noted that as alliances expand in the Indo-Pacific region and beyond, future trade norms may model after the CPTPP.
The main issue lies within the agricultural sector. The CPTPP includes countries like Australia, New Zealand, and Canada, which have strong agricultural export competitiveness. The agricultural sector is concerned that negotiations may demand a higher level of market openness for agricultural products than existing FTAs.
In fact, the Korea Federation of Agricultural Management Associations and the Korea Federation of Fisheries Management Associations held a press conference, stating, "The government must prioritize the sustainability of agriculture and fisheries, the survival rights of farmers and fishermen, and the safety of the nation's food supply. We demand an immediate halt to the review of CPTPP membership without sufficient consultation with agricultural stakeholders."
In response, the government acknowledges that persuading the agricultural sector and other stakeholders will be a key variable in the membership review process. Park Jeong-seong, head of the Trade Negotiation Bureau at the Ministry of Trade, Industry and Energy, emphasized during his inauguration that the government must consistently implement diversification policies and actively communicate with business leaders, farmers, and field representatives. A government official also noted, "The CPTPP is a matter that requires communication not only from various departments but also from relevant interest groups and organizations."
Kim Da-som, a researcher at the Korea International Trade Association's International Trade and Economic Research Institute, stated, "Joining the CPTPP could have positive effects on our economy in terms of market diversification, supply chain stability, and reducing transaction costs through unified trade norms. However, we must also consider the impact on sensitive industries like agriculture, and it is essential to gather sufficient opinions from domestic stakeholders before deciding on membership."
She added, "As the CPTPP expands its membership while also advancing the agreement, these factors should be taken into account when considering membership. Rather than rushing to join, we should assess the impact on sensitive domestic industries and the ongoing expansion and enhancement of the CPTPP to determine the appropriate timing for membership."
* This article has been translated by AI.
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