Research Reports
Trans-Pacific Partnership Agreements: Results of Negotiations and Implications for Accession
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AuthorChoi, Seikyun
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Publication Date2011.07.30
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Original
Trans-Pacific Partnership(TPP) is a multilateral free trade agreement among New Zealand, Singapore, Chile and Brunei launched in June 2005 to promote economic integration of the Asia Pacific region. It aims to eliminate tariffs by 2015. With the joining of new member countries including Japan and the United States looming, it is time for Korea to review the possibility of joining the TPP proactively.
As new members are required to accommodate the existing agreements of the current TPP, it is inevitable for Korea to open up its market at a higher level than the current FTAs it has signed. New Zealand agreed to scrap tariffs on every product (including produce) within ten years while Chile set the tariff elimination period at up to 12 years. Singapore maintained tariffs on 6 product categories. But they are mostly agricultural produce and it lifted the tariffs right after joining the TPP. Brunei agreed to get rid of tariffs on all agricultural products except for tobacco and alcoholic liquors.
Against this backdrop, as the main principle of TPP is zero tariffs for all products, it is highly unlikely that Korea, if it intends to join the treaty, is allowed waivers in market opening except for especial cases. It remains to be seen that what level of agreements that five countries that are currently under TPP membership negotiations (i.e., the US, Peru, Australia, Malaysia and Vietnam) achieve. Based on the negotiation result, Korea may be able to secure some level of flexibility.
Even though rice among grains is excluded from concession, it is expected that pressures on additional opening for major other grains such as soybeans, potatoes, and corns is building. In particular, the pressures on opening the Korean market to US soybeans and potatoes become large. To Chile and Peru, Korea is expected to widen its market for their corns and potatoes.
In the case of livestock products, there are increasing pressures to open the Korean market up to US refrigerated chicken, beef, honey, milk powder, cheese and other diary products. But when it comes to pork, Korea faces less pressure for additional opening as the Korea-US FTA allowed 10 years of grace period for tariff eradication. On the contrary, as the Korea-ASEAN FTA mandated a relatively low level of market opening for livestock products, Korea would face pressure for more market opening for ASEAN if it joins the TPP. With Chile, it may broaden its market access to refrigerated chicken, beef and diary food except for yogurt.
As the Korea-US FTA agreed to eliminate the tariffs on many fruits only after a grace period of over ten years, fruit is the trickiest area of market opening to the US with the TPP. Currently, banana, pineapple and tangerine coming from ASEAN countries are excluded from tariff elimination and the tariffs on apples and pears will be partially lifted (20% and 50% respectively) based on the Korea ASEAN FTA. In the case of the FTA with Chile, apples and pears are excluded from tariff elimination and discussions on market opening for tangerines, bananas, oranges, pineapples and other tropical fruits are scheduled to be launched after DDA negotiations. All in all, there will be increasing pressure on market opening with Korea’s joining of TPP.
In conclusion, the benefits of Korea’s joining the of TPP will not be significant. Korea already has concluded FTAs with Chile, Singapore, the US, Peru, Malaysia, Vietnam and Brunei, the members of TPP negotiations and FTA negotiations are under way with New Zealand and Australia. But losses from additional market opening for agricultural products will be visible. Therefore, it needs to review the possibility of joining the TPP after carefully monitoring TPP negotiations of 5 new countries and decisions of Japan and the assessing negative/positive impacts of additional market opening of agricultural/non-agricultural products.
Researchers: Choi Sei-Kyun(Ph.D), Dae-Hee Chung and Gyu-Dam Choi(Ph.D)
Research period: 2011. 3. - 2011. 7.
E-mail address: skchoi@krei.re.kr
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