South Korea is happy to join the Trans-Pacific Partnership (TPP), but its negotiations seeking a bilateral free trade agreement (FTA) with China will take priority over joining the TPP.
The Trade Ministry of South Korea said in a press release on Monday that the Korean 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,” the Wall Street Journal reported.
South Korea has been an advocate of free trade -- which the TPP aims to regulate -- but it has thus far focused on bilateral deals, as multilateral agreements like the TPP are complex and slow to come to fruition. 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.
The nation hopes to come to new trading terms with its biggest trade partner, China, which absorbed 26 percent of South Korea’s exports last year, according to South Korea’s Trade Ministry. The bilateral trade between the neighboring countries reached $221 billion. The free trade talks have been ongoing since May 2012.
“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, according to the Wall Street Journal.
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A deal eliminating 90 percent of import tariffs between the two countries could boost South Korea’s economy by 3 percent over the next decade, officials believe. In particular, the deal would help South Korea’s automobile, textile and petrochemical sectors, said Ronald Man, an economist for HSBC.
The TPP currently involves 12 countries in the Asia Pacific region, including the U.S., Australia, Japan and Malaysia. Once inked, the TPP member nations' economies would make up 40 percent of the global economy. The pact aims to overhaul trade relations among member nations and establish new rules in areas as diverse as intellectual property, labor and the role of the governments in private enterprise.
The proposed partnership has been seen as a threat to China’s international trade influence by some, but the U.S. has said that China and other nations are free to join the TPP as long as they can abide by partnership's rules.
Negotiations on the TPP have been underway for four years, but progress remains slow. While many heads of state involved had said they hoped to reach an agreement by the end of 2013, the terms of the partnership involving trading heavyweights have yet to be finalized, according to the Wall Street Journal.