Korea-China FTA prioritized over TPP

There has been a growing concern that Korea missed its chance to join the Trans-Pacific Partnership (TPP) in which the U.S. and Japan are the main players. Some politicians and economists are criticizing that this is because Korea was politically cautious about China and other countries and showed unenthusiastic response to several invitations from the U.S. They added that if Korea changes its mind to join in future, it will have to pay for an expensive "entrance fee." The government counters the reproach by saying that it was "a matter of political priority."

According to the Ministry of Trade, Industry and Energy and the Ministry of Strategy and Finance on Wednesday, the U.S. has strongly urged Korea`s participation through various channels since 2011, especially before the inauguration of the Park Geun-hye administration. However, the Lee Myung-bak administration showed only passive responses for it had not been long after the conclusion of the Korea-U.S. FTA and the Park administration did the same as it prioritized the Korea-China FTA over the TPP.

"Back then, the TPP was not the top priority as Korea was already having FTAs with most countries that declared to join the TPP. Such a country as Korea that has limited resources available should not jump into several `battlegrounds` at the same time," said Professor Park Tae-ho of Graduate School of International Studies at Seoul National University. Trade experts analyzed that the rejection may be caused by the trauma from the "pro-American policies" of the Lee administration that had to suffer from the mad cow case during the ratification process for the Korea-U.S. FTA.

Also when the U.S. began to persuade Korea in earnest, it was going through during the presidential transition period. The Presidential Transition Committee in early 2013 underwent the government reorganization by separating the Ministry of Trade from the Ministry of Foreign Affairs and Trades (now the Ministry of Foreign Affairs) and merging it into the Ministry of Knowledge and Economy (now the Ministry of Trade, Industry, and Energy). It is analyzed that this is why the government could not make such a critical decision on changes in trade policies.

The Park Geun-hye administration that was launched on Feb. 25, 2013 did not include the TPP in its political agenda as well. It made more effort on trade with China than with the U.S. In the national political agenda list the transition team released in late February 2013, pushing through the Korea-China FTA and the Korea-China-Japan FTA was put on the top followed by the Regional Comprehensive Economic Partnership (RCEP) that China advocated. The TPP was on the third priority. In April 2013, Acting Deputy U.S. Trade Representative Wendy Cutler once again called upon Korea to participate in the TPP but the Korean government rejected it. "Pushing for the Korea-China FTA was the top priority because Korea already concluded an FTA with the U.S. and it was not sure if Japan would join the TPP. If we declared to participate in the TPP in the early stage, the Korea-China FTA would not have happened," a senior government official said.

According to some trade officers, when Japan officially declared its participation in the TPP in July 2013, most in the government speculated that the TPP would not be concluded shortly. But many criticize that the government should have foreseen Japan`s strategy to change the game after losing its chance for the FTA. The criticism comes even within the ruling party that "Korea is obsessed with bilateral FTAs when a `mega FTA` among multiple nations is becoming a new trade trend." Rep. Shim Jae-chul of the ruling Saenuri Party said that it is a trade strategy failure to miss the chance to join the multilateral FTA while pursuing for the bilateral FTA, which is a smaller board.

However, experts pointed out that the issue should not lead to shifting the blame on to each other as it can undermine Korea`s negotiation power in the international community. "The National Assembly should pass the Korea-China FTA and other agendas as soon as possible and actively participate in the TPP as well," said Kim Jong-hoon, a Saenuri Party member and former director-general of the Bilateral Trade Bureau.