S. Korea welcomes TPP agreement, will strive to join mega trade bloc

SEJONG, Oct. 5 (Yonhap) -- South Korea's government on Monday welcomed the agreement reached to create the Trans-Pacific Partnership (TPP) and said it will strive to join the mega trade bloc as soon as it can. The Ministry of Trade, Industry and Energy said in a statement that the new global trade order will fuel the movement of goods and services and business investments in the wider Asia-Pacific region. "With the agreement being reached, South Korea will actively examine details of the new trade arrangement and analyze its impact on its own economy," said Kim Hak-do, assistant minister for trade negotiations. The United States, Japan, Canada, Australia, Mexico, Vietnam, Malaysia, New Zealand, Chile, Peru, Singapore and Brunei reached the landmark free trade pact in Atlanta after marathon negotiations. The 12 nations were able to iron out differences on such key issues as the ratio of locally made auto parts to make the finished car eligible for duties exemptions, opening of the dairy market, and the duration of intellectual protection for new drugs. There were some 30 "chapters" touched on during the negotiations. South Korea had officially expressed interest in the TPP in late 2013 but had been left out of the initial negotiations and had to join as a second-round member. The U.S.-led talks that kicked off in 2010, which encompass countries accounting for roughly 40 percent of the global gross domestic product (GDP), are expected to set the stage for new rules regulating international free trade and intellectual property rights. Kim said that while there is a need to check the wording of the agreement, its impact on South Korea should be viewed in the light of before and after the agreement goes into effect in each of the signatory nations. "Of the 12 countries, South Korea has free trade agreements (FTA) with 10, while it has engaged in talks with Japan and Mexico," the senior official said. He added that with what has been gathered so far, the TPP is not too different from Seoul's bilateral FTA with Washington. Before its ratification, South Korea can enjoy an edge over rivals such as Japan, in terms of access to vast markets like the United States, while it may find itself at a slight disadvantage once the TPP is ratified by all sides in the coming years. Japan currently does not have an open trade deal with the world's No. 1 economy. He expected the ratification process could be concluded by late 2017 or 2018 if there are no serious obstacles. On when the country will be able to join the TPP, he said this will depend on many factors, such as the pace of ratification and what conditions have been set for later entrants. He said that since expressing interest, Seoul has actively engaged in talks with all countries in the free trade pact and received favorable responses to membership from all sides. "Countries are in agreement that in light of the position South Korea enjoys in the Asia-Pacific region, it only makes sense for it to join," the assistant minister said. Related to South Korea eventually joining the agreement, Kim predicted it can help boost the country's GDP by upward of 1.8 percent over the long haul. The trade ministry, meanwhile, said that along with its efforts to join the TPP, the country will move forward with talks to reach a trilateral open trade pact with China and Japan, as well as try to forge the Regional Comprehensive Economic Partnership for East Asia. South Korean companies said after the agreement was announced that the TPP will herald a new beginning for trade that can create more opportunities as well as challenges, especially since Japan will be in a good position to make greater inroads into vast markets such as the United States. "Japan, which already enjoys considerable competitiveness in terms of quality and more recently thanks to the weak yen, a considerable price advantage, can grab market share that can hurt local companies," a source at the state-run Korea Trade-Investment Promotion Agency said. On the other hand, the official said many local companies that have built up production lines in the United States and Mexico over the years may not be seriously affected. He said in areas like cars and auto parts, local companies need to be on alert. In regards to the textile sector, local companies said they have been have moving to set up production lines in countries like Vietnam, and that the TPP can actually help them ship products to other markets. On electronics and steel, companies here claimed that any fallout from the new agreement should be limited. "Some fallout is inevitable, but over the years, South Korean companies have made solid inroads into overseas markets so they should be able to weather most challenges," an official for a local business association said. yonngong@yna.co.kr