When Is the Best Time to Join CPTPP? "Next Year, a Calm Zone Between the US and China, Is the Turning Point"

Experts Agree "Join Faster Than the US"... New US Administration to Focus on Domestic Issues Next Year
"Start Informal Talks on Automobiles, Materials, Parts & Equipment, Agricultural & Marine Products, Digital"
Challenges Mount with State-Owned Enterprise Subsidies & Digital Regionalization
US Likely to Pursue New Trade Order via WTO Reform Rather Than Rejoining CPTPP

[Asia Economy Reporter Moon Chae-seok] As the government declares the expansion of its Free Trade Agreement (FTA) territory, there is a forecast that next year will be the optimal time to push this forward. Since the new Biden administration in the United States is less likely to immediately engage in multilateral trade, Korea can actively pursue FTA membership without heavily considering its relationship with China.

The biggest focus in the trade and commerce sector for the new year is the issue of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). President Moon Jae-in publicly stated earlier this month at the Trade Day ceremony that "we will continue to review joining the CPTPP."

Multiple trade experts advise that this issue should be resolved by next year, considering the movements of the new U.S. administration. Since the U.S. is likely to turn its attention to the international trade stage, including the CPTPP, starting in 2022, Korea needs to hasten to resolve joining the mega FTA CPTPP before then.

Kim Heung-jong, President of the Korea Institute for International Economic Policy, said on the 22nd, "The U.S. new administration is expected to show visible negotiation movements related to CPTPP membership around the mid-term of its term in 2022 and realize it by 2023. If Korea joins later than the U.S., the entry barriers set by member countries may become higher, so we should start informal one-on-one negotiations with the 11 member countries from next year in a form that suits our position."

Next year is considered the optimal time to expand FTAs due to the Biden administration’s policy stance. President-elect Biden has expressed his intention to focus on domestic issues for the time being after taking office. Given the severe impact of the COVID-19 pandemic, it is difficult to turn attention outward. Jake Sullivan, appointed as National Security Advisor (NSA) to the Biden administration’s White House National Security Council (NSC), recently stated in an interview with The Wall Street Journal (WSJ), "When talking about business, attracting investment to strengthen domestic competitiveness should come before pushing major trade initiatives."

It is also fortunate for Korea that it can be less conscious of China. Seo Jin-gyo, Senior Researcher at the Korea Institute for International Economic Policy, said, "If the U.S. is rushing to join and we proceed with CPTPP membership, we inevitably have to be mindful of China, but next year we can avoid actions that provoke China." Delaying CPTPP membership amid ongoing U.S.-China conflicts could cause Korea to miss the appropriate timing. Some in academia evaluate that President Moon’s statement on CPTPP membership was made with this situation in mind.

Kang In-soo, Professor of Economics at Sookmyung Women’s University, said, "As a country aiming for multilateral free trade, Korea could not remain silent after Biden’s emphasis on restoring multilateral trade and President Xi’s indication of CPTPP membership. Rejoining the CPTPP is an effective economic means to check China."

Korea must also consider that if it joins the CPTPP later than the U.S., the existing 11 countries are likely to raise their demands for domestic market opening. To prepare for this, voices are emerging that Korea should start informal one-on-one negotiations with the 11 countries already in the CPTPP from next year on automobiles, materials/components/equipment, agricultural and fishery products, and digital trade. By doing so, Korea can strengthen its negotiating power in advance to maximize the domestic market opening scope for sensitive items such as machinery, automobiles, and agricultural products.

However, there are numerous tasks to be resolved beforehand to push for membership next year. Key issues include subsidies to state-owned enterprises and digital localization (whether to allow personal data transfer overseas).

It is uncertain whether the 'CPTPP' system will be maintained after the U.S. reappears on the international stage. The U.S. might create a completely different system under the banner of establishing a new trade order. Especially, the U.S. prioritizes 'World Trade Organization (WTO) reform' as its top task upon returning to the international stage, which could lead to a different form of trade order. It is reported that the government has been reviewing various options since President Moon first hinted at CPTPP membership on the 8th.

A senior official from the trade authorities said, "This has been a consistent message from Biden since he was a presidential candidate. We need to assess whether (pursuing CPTPP membership) benefits our national interests, and we should not waste time just because of the U.S. position."

This content was produced with the assistance of AI translation services.