Written by Sohyun Zoe Lee.
In 2010, the United States (US) extended an invitation to South Korea to join the Trans-Pacific Partnership (TPP) after the successful conclusion of the Korea-US free trade agreement (FTA). At the time, South Korea was rapidly growing as a hub of FTAs, negotiating multiple cross-regional FTAs, including those with big and advanced economies such as the US and the European Union. Surprisingly, however, it had refrained from joining the TPP. Meanwhile, South Korea joined another mega-regional FTA, the Regional Comprehensive Economic Partnership (RCEP), launched in 2012. With the emergence of RCEP, 2010 became recognised as the start of an era of the competitive rise of mega-regional FTAs. Moreover, South Korea reached an inter-ministry consensus in April 2022 under the Moon Jae-in administration. This is when it officially announced the government’s decision to apply for the Comprehensive and Progressive Agreement for TPP (CPTPP), the successor of TPP, after the withdrawal of the US. Against this backdrop, why is South Korea yet to join CPTPP?
Addressing this question first requires understanding how South Korea’s FTAs have evolved to date. South Korea’s history of FTAs can be traced back to 1998 when the Kim Dae-jung government announced the FTA Promotion Guidelines to join the global tide of bilateralism. Several international factors pushed the government to engage with FTAs: the Asian Financial Crisis of 1997-8, the competitive emergence of FTAs across the globe, and the lack of progress in the multilateral trade negotiations. South Korea’s high dependence on trade also made it essential to maintain a close economic relationship with the rest of the world. Since then, South Korea has negotiated 18 FTAs with fifty-seven countries, including the most recent pact, RCEP. As a result, FTAs have been considered a vital foreign policy instrument to gain control over their high vulnerability to the international economic environment.
Unsmooth Sails with FTAs
Seoul’s journey with FTAs has not always been smooth sailing. Even though South Korea’s FTAs began to expand rapidly in the early to the mid-2000s, their fervour fizzled out in the mid-2010s, which is also reflective of South Korea’s delay in joining CPTPP. Moreover, the country’s FTAs have developed in inconsistent ways. This is largely due to the institutional structure that imbues trade negotiating authority to the President as the chief diplomat within the limited period of a five-year single-term presidency. For instance, under the Roh Moo-hyun administration, South Korea actively promoted ambitious cross-regional FTAs with the US and the EU. Although President Roh’s political support came from the anti-FTA camp, the key decision-makers were convinced that FTAs are practical for the South Korean economy.
Similarly, trade governance is also subject to change depending on the preference of the individual President’s agenda and key personnel’s perspectives. A case in point is the Park Geun-hye administration’s relocation of the trade bureau from the Ministry of Foreign Affairs and Trade (MOFAT) to the Ministry of Trade, Industry and Energy (MOTIE) in 2013, which intended to redirect the country’s policy focus from the promotion of ‘simultaneous and multi-track’ FTAs to domestic industries. To this end, how leaders and officials perceive their domestic and international environment and make decisions based on this comprehensive assessment have been essential in shaping South Korea’s FTA policies.
In this regard, South Korea’s missed opportunities with CPTPP demonstrate that the decision maker’s preferences and ideas have been particularly critical in determining Seoul’s decisions. In 2010, President Lee Myung-bak did not consider joining the TPP urgent. After the tumultuous ratification of the KORUS FTA, the government had been strained and, therefore, was no longer enthusiastic about joining another sizeable agreement led by the US. President Lee was concerned that joining the TPP would reignite the anti-US sentiment that had prevailed during the KORUS FTA negotiations. Furthermore, domestic discussions were inclined toward the argument that joining the TPP would not offer a direct, visible economic incentive, as South Korea at the time had or was negotiating bilateral FTAs with key TPP member states. Thus, the administration decided to focus on negotiating an FTA with China to maximise South Korea’s position as a hub of FTAs.
President Park also focused on the Korea-China FTA, which aimed at improving South Korea’s relationship with North Korea. President Park’s top policy agenda was reunification; thus, maintaining a friendly relationship with China was considered a way of gaining influence over North Korea. Furthermore, the government’s position was that economic gain from the TPP would not be as significant as the KCFTA. This policy priority on China led to a subsequent shortage of diplomatic resources away from the TPP. At the time, Seoul’s trade negotiation capacity had already been significantly curtailed by the relocation of the trade bureau from the MOFAT to the MOTIE. This institutional setback was amplified by the diversion of human resources to the KCFTA negotiations and the implementation of the KORUS FTA and the Korea-EU FTA.
By contrast, President Moon Jae-in considered that CPTPP would benefit the country. However, the administration focused on the New Southern Policy rather than CPTPP. In the absence of the President’s strong preference regarding CPTPP, the newly appointed trade minister, Kim Hyun-chong’s ideas played a significant role in shaping the administration’s early trade policies. Minister Kim had already served as the Minister for Trade under President Roh, during which South Korea’s FTA network aggressively expanded with Minister Kim’s emphasis on negotiating FTAs with the US and the EU. At the time, Minister Kim was pessimistic about South Korea’s relationship with Japan and argued against the Korea-Japan FTA negotiations.
This perception remained unchanged under the Moon administration. Minister Kim considered CPTPP a de facto FTA with Japan, and there was no incentive to join the agreement without US participation. He also thought it was too early to expose South Korea’s manufacturing industries to compete with Japan. Moreover, worsened Korea-Japan relations and trade conflict at the time deepened this concern, as Japan could demand the withdrawal of compensation for forced labour or importation of agricultural and fishery products from Fukushima as a precondition for joining CPTPP. In addition, South Korea would have to pay the costs of joining the agreement late by fully adhering to the rules of CPTPP. Since 2021, the Moon administration began to pay greater attention to CPTPP with the election of US President Joe Biden and the United Kingdom, China, Taiwan, and Ecuador’s competitive application to CPTPP membership. However, the administration was running out of time to realise South Korea’s long-delayed application to CPTPP. At the same time, inefficiencies caused by trade institutions further contributed to this slow decision-making process. While opposition from the interest groups continued to be considered in this process, their influence was limited in determining the timing or the conditions of FTAs rather than in shaping South Korea’s strategic choice of FTA partners.
The Yoon Seok-yeol government just took off last month. Therefore, it is uncertain whether the trade institutions will be reorganised, although the Yoon administration has considered moving the trade bureaus back to the Ministry of Foreign Affairs. It is also unclear how the Yoon government will approach the issue of CPTPP. However, the outlook is much more positive than under the Moon administration, particularly regarding South Korea’s relationship with Japan. Furthermore, president Yoon has demonstrated an interest in CPTPP since his presidential campaign.
Yoon’s presidential transition committee has announced 110 national tasks this month, including South Korea’s joining of CPTPP and the US-led Indo-Pacific Economic Framework (IPEF), under the 98th task of ‘proactive promotion of economic security diplomacy.’ Hence, the administration may see progress regarding CPTPP, which will need to start by completing the remaining domestic reporting procedure to the National Assembly. In particular, South Korea’s successful application to CPTPP will depend on the new administration’s priority and perception of interests. Although the timing of its joining could be delayed by the government’s reluctance to face the interest groups considering that it is only the beginning of Yoon’s term, decision-making efficiency could also be recouped by restructuring trade governance.
Taiwan’s Application as a Facilitator
What implications does South Korea’s application to CPTPP hold for Taiwan and vice versa? For South Korea, Taiwan’s application to CPTPP has become a facilitator for the country to bid for CPTPP membership before losing yet another window of opportunity. Taiwan’s move has also been a point of reference for Seoul, sharing similar economic strengths and weaknesses; Taiwan is currently much further away than South Korea in preparing for CPTPP membership, while South Korea has been indecisive in joining the agreement for over a decade. For Taiwan, joining CPTPP will provide a level playing field for fair and open competition, particularly for its manufacturing sector, for instance, with countries such as South Korea that already has multiple crisscrossing FTAs covering over 70 per cent of its exports. This will, in turn, further strengthen Taiwan’s position in the global supply chains.
Dr Sohyun Zoe Lee joined Queen University Belfast as Lecturer in International Political Economy in 2020. Her scholarly interests include international relations, international political economy, free trade agreements (FTAs) and regional economic integration in East Asia and the Asia-Pacific. She is particularly interested in the processes and practices involved in FTA negotiations through the examination of interactions between various domestic stakeholders. She also works closely with policymakers and provides expertise in trade policies. From 2018 to 2021, she served as a postdoctoral fellow at the Institute of International Relations, China Foreign Affairs University. Dr Lee received her PhD in International Relations from the London School of Economics and Political Science, AM in Regional Studies-East Asia from Harvard University, and BA in International Studies from Korea University.
This article was published as part of a special issue on “Comprehensive and Progressive Agreement for Trans-Pacific Partnership.”