Government Accelerates CPTPP Participation... Focused Support by Selecting Strategic Economic Cooperation Countries

Announcement of the 2021 External Economic Policy Implementation Strategy

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kim Hyunjung] The government is accelerating institutional improvements such as sanitary quarantine and digital trade to join the mega free trade agreement (FTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). While promoting economic cooperation with the U.S. Biden administration in areas such as climate change response, health and quarantine, and New Deal cooperation, it has decided to expand the approval scale of the Green and Digital External Economic Cooperation Fund (EDCF) by $300 million compared to last year.

On the 11th, the government held the Foreign Economic Ministers' Meeting and the External Economic Cooperation Fund (EDCF) Management Committee at the Government Complex Sejong, chaired by Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki, and finalized the "2021 Foreign Economic Policy Promotion Strategy." The four key policy directions presented were ▲ pioneering new overseas expansion paths ▲ preparing for the new trade order ▲ proactive participation in international cooperation ▲ future-oriented bilateral cooperation.

The government cited "actively reviewing mega FTAs such as the CPTPP and preparing domestic institutional improvement plans" as the first of the ten major achievement goals in this year's foreign economic policy promotion strategy. With the weakening of multilateralism centered on the World Trade Organization (WTO), the importance of mega FTAs has been highlighted, and considering the accelerated economic bloc formation in the Asia-Pacific region through the CPTPP, which came into effect at the end of 2018, Korea intends to actively consider joining the CPTPP. The government expects that through this, Korea can participate proactively in the new trade order and enjoy the effects of concluding high-level FTAs. Domestic institutional improvement plans in four major areas?sanitary quarantine, fisheries subsidies, digital trade, and state-owned enterprises? which should be prerequisites for CPTPP participation, will also be prepared within the first half of this year.

The Regional Comprehensive Economic Partnership (RCEP) is scheduled to complete domestic procedures for its enforcement within this year. The government plans to complete internal procedures in the first half and prepare for the National Assembly ratification process in the second half.

In line with the inauguration of the new U.S. administration led by President Joe Biden, strategic economic cooperation between Korea and the U.S. will be strengthened. Cooperation will focus on five key areas: climate change response, health and quarantine, digital and green New Deal, advanced technology, and multilateralism. Regarding climate change, Korea will link the U.S.'s "carbon neutrality plan" with Korea's "2050 Carbon Neutrality Promotion Strategy" and discover cooperative projects between research institutions of both countries. In health and quarantine, a joint clinical research system for vaccines and therapeutics and a joint response consultation channel for COVID-19 will be established. Major trade issues between Korea and the U.S., such as countervailing duties and digital taxes, will be communicated with the U.S. side in advance to reduce the possibility of friction.

Within the first half of this year, a "strategic cooperation country" will be selected to introduce customized cooperation projects. With China, support will be provided for cooperation between companies of both countries in fields such as green and renewable energy, electric and hydrogen vehicles, health, quarantine, and bio sectors. With Japan, through bilateral dialogue, support will be given to joint investments in Japanese small and medium-sized enterprises, joint market entry by Korean and Japanese companies into third countries, and revitalization of existing private exchanges.

The government expects that negotiations on the Korea-China-Japan FTA may resume after the COVID-19 situation stabilizes. While solidifying economic cooperation with the New Southern (Vietnam, Indonesia, India, Myanmar, ASEAN, etc.) and New Northern (Russia, Uzbekistan, Kazakhstan, Mongolia, etc.) regions, Korea will establish exclusive industrial complexes for Korean companies in Yangon, Myanmar; Hung Yen Province, Vietnam; Primorsky Krai, Russia; and Changchun, China. With Russia, a joint investment fund to promote bilateral economic cooperation will be established within this year, prioritizing support for Russian projects involving Korean companies.

The government will select "strategic cooperation countries" within the first half of this year and focus cooperation on four core project areas: infrastructure and urban development, eco-friendly energy, health and medical care. Beyond current policy finance and official development assistance (ODA), new cooperation tools will be introduced, and the strategic investment functions of policy financial institutions will be strengthened.

To expand the FTA network, which was at about 78% of the world's GDP at the end of last year, to 90%, new FTA negotiations will be conducted with major countries with high growth potential such as the New Southern, New Northern, and Latin America regions. Overseas orders aim to exceed $30 billion for the second consecutive year, following $35.13 billion last year.

In addition, the government plans to lead discussions on climate change response by successfully hosting the P4G (Partnering for Green Growth and the Global Goals 2030) Summit and prepare for strengthening trade norms by concluding the Korea-Singapore Digital Partnership Agreement.

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