Korea’s TPP time is now
The resurrection of the TPP is one of the most significant geopolitical developments of recent years. When the Trump Administration withdrew in 2017 – reducing the bloc by almost two-thirds in size – few observers thought it would survive. But committed efforts by the remaining members saw the agreement resurrected in 2018 as the Comprehensive and Progressive Partnership for the TPP (or CPTPP).
The CPTPP is a landmark addition to the global trade architecture. It is a “21st century” trade agreement, which combines conventional tariff reductions with a range of regulatory and rule-making provisions. Covering issues such as e-commerce, services, telecommunications, labour standards and the environment, it is specifically configured to the needs of modern, technology-intensive economies.
And now, in 2021, the CPTPP is poised to expand its scope and influence.
Despite the protectionist headwinds buffeting the global economy, many are considering CPTPP membership. Eight governments – the UK, Korea, US, Thailand, Indonesia, Philippines, China and Taiwan – have expressed interest. In February, the UK became the first country to lodge a formal accession application.
Korea has long been in the frame for membership. It first announced interest back in 2013, mid-way through the original TPP negotiations. It was widely expected to be the first accession once TPP negotiations were complete, but this process was scotched by the Trump Administration’s withdrawal.
But with recent changes in global geopolitics, Korea is again re-engaging. Preliminary consultations with CPTPP members began in 2019, and in January the Moon Administration announced it would formally seek membership. Doing so would offer Korea both economic and strategic benefits.
Economically, Korea would be joining a systemically-important part of the global trade architecture. The CPTPP bloc accounts for 13 percent of world GDP and 15 percent of trade, which today places it as the third largest regional bloc behind NAFTA and the EU. A quarter of Korea’s trade is with the CPTPP, and joining would open up new sectoral opportunities not covered by other FTAs, particularly in service and technology.
Korea is also at an advantage because its policy settings are already very close to CPTPP standards. For a tech-intensive and developed market economy like Korea, the CPTPP does not require heavy domestic reforms.
Strategically, Korea would be joining an important piece of the global economic architecture.
With the WTO stalled, regional agreements like the CPTPP have now become the main vehicles for trade liberalisation and rule-making. With its very high-standard provisions, an expanding CPTPP will be a template for the next phase of global trade diplomacy. As a member, Korea would become a rule-maker rather than rule-taker.
And if the US rejoins the TPP during the Biden Administration, all of these advantages multiply. US membership alone would almost triple the size of the bloc, as well as signalling its return to a leadership position in the institutions of the Indo-Pacific. As Biden inherits a complex and crisis-laden policy agenda, its accession will need to wait for later in the term of the Administration. This gives Korea a chance to ‘get in on the ground floor’, before the agreement bulks up.
Indeed, CPTPP members are very keen for expansion, and would actively welcome Korea’s engagement. Its market-based and services-driven economy is a good fit with the agreement, and would make for a relatively straightforward accession process. Korea is an attractive first member, which could set the tone for later and more challenging accession talks.
However, Korea’s CPTPP clock is ticking. With the UK’s membership application lodged, the existing members must now formally start up the accession mechanism.
As the CPTPP allows multiple accessions to be processed simultaneously, this presents Korea with a window of opportunity to join alongside the UK. If Korea defers the matter for later, it will need to wait for the UK process to complete, by which time the US might join the queue. Applying now with the UK – a similar and complementary partner – would greatly ease Korea’s accession process.
The CPTPP is not only a good fit with Korea’s economic and strategic interests. It is also likely to become one of the most significant pieces of the global and regional architecture. Korea now has an ideal opportunity to be part of the new rules-based order of the 21st century.
A condensed version of this article featured in 매일경제신문 (Maeil Business News) on 27 April 2021.