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The Peninsula

Korea-Japan Tensions Should Not Prevent CPTPP Talks

Published January 5, 2022
Category: South Korea

Korea is expected to apply later this year for membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade agreement between eleven states in the Indo-Pacific. One signatory of the agreement is Japan, raising fears that bilateral tensions may encourage Tokyo to oppose Seoul’s bid. But noting their shared membership in another free trade agreement, experts say Korea is an excellent candidate for membership in the deal.

Korea first announced it would begin the process to join the CPTPP in mid-December. Speaking at a government meeting, Finance Minister Hong Nam-ki said that the government was “actively” looking at the deal in the context of its larger regional trade strategy. “The government is trying to collect public opinions and social discussions on the CPTPP accession,” he said according to the Yonhap news agency. While Korean officials had indicated an interest in the deal for months, FM Hong said that the need to begin consultations with other stakeholders in the economy was because of China and Taiwan’s announcement to join the agreement.

“It’s an opportune time for Korea to join CPTPP given that there’s a growing queue of other applicants,” said Wendy Cutler, vice president and managing director of the Asia Society Policy Institute. She also said that it was a mistake that Korea ended up not joining the original Trans Pacific Partnership, the precursor to the CPTPP. If Korea waits too long on joining the CPTPP, Ms. Cutler said that “it could fall at the end of the queue at a time when, in many respects, it’s probably more ready than many of the other applicants.”

The news about CPTPP accession comes ahead of the entering into force of another major trade agreement Korea is a party to. With the ratification by Australia and New Zealand, the Regional Comprehensive Economic Partnership (RCEP) will enter into force in January. That agreement will be a new entry in the list of free trade agreements that Korea is a member of. These include bilateral FTAs with twelve states, and three regional trade agreements with the Association of Southeast Asian States, the European Union, and the European Free Trade Association.

Having ratified the agreement, approval by Tokyo will be necessary for Seoul’s successful accession to the CPTPP. After Korea’s announcement, Japan gave a less than ringing endorsement. According to the Kyodo news agency, Chief Cabinet Spokesman Matsuno Hirokazu said at a press conference: “What we need to do first is to see if an economy that seeks to join the pact is fully prepared to reach the high levels of the TPP 11.” But experts caution not to read too much into his statement. “I think generally most countries try and be objective when there’s new members,” said Riley Walters, deputy director of the Japan Chair at the Hudson Institute.

In fact, Korea’s successful conclusion of other trade agreements like RCEP bode well for possible talks to join the CPTPP. Both sides were “able to make reciprocal market access commitments, and have those bilateral negotiations as part of the broader RCEP,” pointed out Ms. Cutler. “So I’m a believer that the same model can be used within a CPTPP context.” Agricultural products are a sensitive issue that may be highlighted in Korea’s negotiations to join the CPTPP, in ways that they were not for RCEP. “But it would not be in Japan or Korea’s interests to raise political issues that undermine the ability of the two countries to work more closely together with their regional trading partners,” said Jeffrey Schott, a senior fellow at the Peterson Institute of International Economics.

A successful conclusion to Korea’s application to the CPTPP could provide Korea with benefits in several ways. Diplomatically, it would provide another venue for engagement between Korean and Japanese officials to address trade issues and other disputes. By deepening the economic and commercial relationship, “hopefully that would spill over to other disputes and disagreements in their overall bilateral relationship,” said Ms. Cutler. It is unlikely to be a panacea, given the depth of disagreements between Seoul and Tokyo. “But it definitely could be a step,” said Mr. Walters.

More broadly, joining CPTPP would strengthen Korea’s economic strategy going forward. By joining the CPTPP, Seoul will have a seat at the table in shaping future rules on trade. “Some may be set in RCEP, but I think many will also be set in CPTPP,” said Ms. Cutler. Future developments, such as the expansion of existing trade deals like the CPTPP, will have important implications for the Korean economy. “When the agreement becomes more and more comprehensive, members who aren’t a part of that could potentially lose out,” said Mr. Walters. “It doesn’t mean it’s a total loss, it just means they’re sometimes cut out,” he added. “They’re just not as competitive as the members who are part of the trade agreements.”

One wild card for the timing of CPTPP negotiations is the Korean presidential elections. FM Hong said recently that the Moon administration expects to submit its application in April, and that it would create a task force to manage the domestic impact of the agreement. His recent comments echo his previous remarks that “the government has an aim to submit the application to join the CPTPP before its five-year term ends,” according to the Yonhap news agency. If the Moon administration fails to submit its application to the CPTPP, it remains to be seen how its successor will handle the issue. “The open question is, will the application be submitted before the election in March,” said Mr. Schott, “or will everything be teed up and the decision handed over to the new president?”

It is not clear how either of the leading candidates would handle CPTPP negotiations. Ahead of RCEP ratification, the Korea Advanced Farmers Federation strongly denounced both trade agreements, promising to organize rallies against the government. Demonstrating awareness of these sensitivities, both presidential front-runners have called on the government to buy surplus rice and stabilize prices. But as one Korean commentator observed, some important policy issues such as international trade policy have not been raised in-depth by either candidate.

Although there may be challenges to a successful bid to join the CPTPP, experts say that negotiators within and without Korea should continue to push forward. Pointing out that “the whole is bigger than the sum of its parts,” Mr. Schott said that both Korea and members of the CPTPP stand to benefit from the deal’s expansion. “The agreement will be more valuable to all its members as its covers a broader geographic and economic area,” he said.

While Korea-Japan tensions are likely to continue, they should not be allowed to interfere with these trade talks. Having concluded high standard agreements with other states, Seoul and Tokyo are “natural partners” according to Ms. Cutler. “I would encourage both to be forward looking, and figure out how they can make this happen looking forward versus trying to look to the past,” she said.

Terrence Matsuo is a Contributing Author at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from the Port of Tacoma’s photostream on flickr Creative Commons.

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