On Oct. 5, 12 countries, making up 40 percent of the world economy and including Japan and the United States finally agreed after years of negotiation on the Trans-Pacific Partnership, the omnibus free trade bill being pushed by Washington, DC.
The agreement was seven years in the making after the administration of US President Barack Obama joined in the negotiations in January 2008, and two years after the government of Japanese Prime Minister Shinzo Abe formally announced that it would take part.
The negotiation process was arduous, reflecting the partnership’s complicated issues. The US, as could be expected, held the keys. Washington was the only directly involved party in the issues that presented the final hurdles, including government procurement, intellectual property rights of new pharmaceutical products, tariffs, and quotas on dairy products and rules of origins. IPR for new pharmaceutical products, especially, was an issue where the interests of participating countries acutely collided and hampered negotiations up until the end.
What’s in it for Seoul?
For South Korea, the trade pact has now become a current problem rather than a prospective one. The South Korean government has to thoroughly review not only the TPP, but also the changing direction of the world trade order and regional architecture after the conclusion of the negotiations.
First of all, the government of President Park Guen-hye seems to have decided to participate in the trade pact. The important point is not the participation itself, but the timing and conditions of participation. The economic gains and losses from participation or non-participation should be the basis of such a decision, and are a combination of tangible issues such as tariff elimination and intangible aspects such as reflecting the position of South Korea in the process of establishing new regulations. The claim that the influence of the TPP can be minimized by focusing on the effects of tariff liberalization is only half-true.
Secondly, the South Korean government should review what method of participation can maximize its national interests. In order for South Korea to become the 13th participating member, it may pursue negotiations independently, or instead consider forming a group with other countries, including Indonesia, Thailand and the Philippines, who have shown interest in participation.
Noodle Bowl of Trade Pacts
Thirdly, the systematic prospect of the trend toward mega-FTA negotiations unfolding in the East Asian region, and a strategic approach to that prospect, should be closely examined. After conclusion of the TPP, much attention has been focused on the Regional Comprehensive Economic Partnership, or RCEP, an FTA negotiation that has been developed among 16 countries – the 10 members of the Association of Southeast Asian Nations and the six countries with which ASEAN has existing free trade agreements.
Depending on the perspective, the TPP and RCEP can be seen as either contradictory or complementary. From South Korea’s point of view, focus should be put not on their contradictory nature, but on a realistic way to harmonize the two. In reality, the number of countries participating in both the TPP and RCEP amount to seven, so there is no need to prematurely conclude that the two will contradict each other. Considering that, these countries should cooperate and work to harmonize the two.