[연합시론] The Mega Free Trade Agreement RCEP is born … Be prepared also for the TPP variable

The Regional Comprehensive Economic Partnership Agreement (RCEP), the world’s largest free trade agreement (FTA), was finally launched on the 15th after signing video conferences by the heads of member states, including President Moon Jae- in. A total of 15 countries participated in the agreement, including Korea, China, Japan, Australia, New Zealand and 10 ASEAN countries. This is the fruit of eight years since the declaration of the East Asia Summit to begin negotiations in November 2012. Even with the exception of India, which was left out for the apparent reason of expanding the trade deficit with China, domestic product Gross nominal of RCEP member countries last year was $ 2.63 trillion and the population in the region was 2.260 million, each representing 30% of the world. It is a scale that exceeds the European Union and the CPTPP (Comprehensive and Progressive Economic Partnership Agreement of the Pacific Basin). If even this is achieved by continuing to persuade India to join, half the world’s population will join the RCEP free trade bloc. For the agreement to enter into force, the internal ratification process of the member countries must be a prerequisite, so countries, including Korea, will have to accelerate obtaining consent for parliamentary ratification.

RCEP, a multilateral trading system that was created amid the deteriorating global trading environment due to the spread of the new coronavirus infection (Corona 19), is expected to serve as an opportunity to confirm the importance of free trade by alleviating the protectionism and unilateralism that put their own interests first. . Along the same lines, President Moon gave the meaning of “the alarm bell for protectionism” in the RCEP summit statements. Furthermore, this agreement is expected to contribute to the recovery of the economy in the region directly affected by Corona 19 by improving the business environment and stabilizing the supply chain. If it is reduced to the benefits that Korea will obtain, it will reduce the threshold of tariffs between the member countries, which will allow to activate trade and investment and diversify the export market. Korean companies exporting auto parts to Indonesia currently have to pay tariffs of up to 40%, but the Blue House explained with a specific case that they will receive tariff-free benefits after the RCEP goes into effect. In particular, there is the possibility that the new southern policy of the Moon Jae-in administration will be more resilient by expanding cooperation and exchanges with ASEAN, our second trading partner.

However, from Korea’s point of view, it is hard to deny that the birth of this huge economy is a double-edged sword. RCEP was originally an idea that Japan called for, and ASEAN is now being assessed as having established itself as a leading force. However, at the time when the struggle for economic hegemony between the United States and China was in full swing, the RCEP was trapped within the framework of an economic bloc in which the breath of China was acting strongly. After US President Donald Trump enforced the withdrawal of the TPP from the perspective of national preference, China’s active participation in the RCEP debate has intensified this bias. The problem is that there are many observations that President-elect Joe Biden may return to the CPTPP, which is currently administered primarily in Japan and Australia, or that the rebuilding of the TPP may be promoted entirely. Korea has never participated in the TPP stage as well as in the CPTPP. From Korea’s perspective, there is a side that did not feel the need to enter the bloc’s economy because it had signed individual FTAs ​​with the TPP member countries. But now the situation is different. Given the situation where the next Biden administration is forcing our decisions regarding the TPP, our administration should begin to prepare thoroughly.

In general, domestic trade experts are in the mood to analyze that it is advantageous to join the TPP, which is a complementary relationship with RCEP, considering that Korea is an open country dependent on exports. However, if China and Japan take tight controls, we may be in trouble. This is the reason why Chinese President Xi Jinping’s visit to Korea over the course of a year and the reorganization of the post by the Japanese government are attracting special attention. In particular, in preparation for the president’s visit to Korea during the transitional period of the US regime, the Moon Jae-in administration hopes that the Moon Jae-in administration will carefully consider various circumstances and conditions both within and outside the country to prepare an optimal position to maximize national interests.

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