President’s final act on trade . . .
South Korean Finance Minister, Hong Nam-ki, announced on Monday that the country would begin the application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade agreement between 11 countries, including Canada. In December 2020, President Moon Jae-in acknowledged the possibility of joining after U.S. President Joe Biden’s election and the finalization of the Regional Comprehensive Economic Partnership (RCEP), which South Korea just ratified ahead of this announcement. Support for CPTPP has been growing domestically in South Korea, but the application announcement has surprised some, as the country will hold national elections in less than three months. The CPTPP bid could be Moon’s final move as president to further commit South Korea to multilateralism and free trade. China’s bid to join the CPTPP has eased some of South Korea’s apprehension, but its rocky relationship with Japan could complicate the process.
Following China’s lead . . .
Finance Minister Hong confirmed that President Moon’s decision was influenced by China’s application to join the CPTPP in September 2021. South Korea does not want to be left out as the agreement matures and member states consolidate trade within the bloc. The Brookings Institution reports that South Korea could lose up to C$3.85 billion annually if it remains outside the agreement. If it joins, it could see a gain of C$110 billion annually. China accounts for 25 per cent of South Korea’s total exports, and while RCEP links the two economies, South Korea does not want to risk being left behind if China joins the CPTPP.
Old wounds create possible obstacles for the future . . .
South Korea and Japan, a CPTPP member, have been in a trade dispute over semiconductors since 2019, a spat stemming from Japan’s reluctance to apologize for its wartime occupation of Korea. Trade relations have warmed since the signing of RCEP in 2020, but Japan remains cautious about South Korea’s readiness to commit to CPTPP’s progressive trade policies. Korea’s March 2022 election could result in a change of government. If Lee Jae-myung, the candidate from Moon’s Democratic Party of Korea, becomes president, it could mean a continued hard line on Japan. If opposition candidate Yoon Seok-youl from the People Power Party wins, he will likely focus on improving bilateral relations. Another obstacle to CPTPP ascension may be closer to home: rural voters, who generally oppose agricultural free trade.