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Seoul affirms interest in joining TPP, but says China deal comes first

Wall Street Journal | January 13, 2014

Seoul affirms interest in joining TPP, but says China deal comes first

By Kwanwoo Jun

South Korea’s Trade Ministry made clear Monday that the country will prioritize bilateral free trade negotiations with China this year over the multilateral Trans-Pacific Partnership.

Inaugurating a trade promotion committee, the ministry said in a press release that the government “will first push for a South Korea-China FTA as a bridgehead for expanding presence in Chinese markets, while considering joining the Trans-Pacific Partnership.”

China is not a party to talks to form the TPP, a U.S.-led free-trade bloc involving 12 countries in Asia-Pacific that together make up 40% of the global economy. The pact aims to boost growth by reducing or eliminating tariffs and establishing new rules of the road in areas as diverse as intellectual property, labor, and government’s role in private enterprise.

Some analysts see the proposed bloc as a U.S. attempt to counter Beijing’s influence in the region. U.S. officials have said China and other countries are free to join the TPP if they adopt its rules.

Market-oriented countries increasingly have turned to regional pacts like the TPP as efforts to reach a new, global agreement under the World Trade Organization have bogged down in recent years. Negotiators at the WTO reached an agreement last month in Bali, Indonesia, on streamlining customs procedures, but fell short of the comprehensive free-trade deal they’ve been seeking since 2001.

South Korea has been a leading global advocate of free trade – its economy depends on exports, after all — but has focused more on bilateral deals, given the complexity and the glacial pace of multilateral talks. It has separate free trade pacts with the U.S., E.U., Chile, India, Peru, Singapore, the Association of Southeast Asian Nations and the European Free Trade Association.

Seoul lately has expressed a keen interest in joining the TPP – especially after its exporting rival Japan joined the negotiations last July.

China is South Korea’s biggest trade partner, absorbing 26% of Korean exports last year, when bilateral trade reached $221 billion, according to South Korea’s Trade Ministry.

The two countries have been in free trade talks since May 2012, with a ninth round of negotiations concluding last week. The next round is scheduled for March in Seoul.

“China is South Korea’s number one trade partner, and there is no question that the talks will take priority this year,” said one Korean negotiator who asked not be named.

Officials believe a deal eliminating 90% of import tariffs between South Korea and China could boost South Korea’s economy by 3% over the next decade.

HSBC economist Ronald Man said a deal would help South Korea’s automobile, textile and petrochemical sectors, but its agriculture and fishery industries would see tougher competition. The talks could conclude by the middle of the year, Mr. Man said.

In contrast, negotiations on the TPP have been underway for four years but progress has been slow. The latest round of talks, last month in Singapore, wrapped up without any breakthrough.

Starting this week, South Korea will hold preliminary talks with key TPP members such as the U.S., Mexico, Chile, Peru, Malaysia and Singapore. President Park Geun-hye said last week she hopes the talks with TPP members will go smoothly this year.

 Fuente: Wall St Journal