Published : Oct. 20, 2015 - 18:00
One common mistake in understanding the Trans-Pacific Partnership deal is to view it as just another free trade agreement. This one is quite different.
People tend to forget the unique feature of this particular agreement: it introduces many new rules of trade, rules that will form new codes of conduct for governments and serve as a platform for future discussions in other settings.
When new rules are being discussed, waiting out has its own benefits and risks. As few can gauge the exact impact and consequences of a new rule, we can wait and see how other early adopters fumble and struggle. We learn from others’ mistakes and adjust our footsteps in following them before we adopt the rules. A temptingly safe choice.
The downside of the waiting strategy is also obvious. Once the trailblazers establish the basic structure of rules as they see fit, you lose the opportunity give your inputs for the general architecture of the rules. You just follow the footsteps of the pathfinders but you can hardly change the general direction that they are heading. The followers have less control over where to and how to get there. So, sitting on the fence has both benefits and risks. You weigh benefits and risks and make a choice. Once a choice is made — either to wait or plunge — then you will have to see how the chips may fall.
That is exactly what has happened with respect to Korea’s position toward the TPP. It decided to wait. The appropriateness of the decision can be challenged, but a decision has been made and the consequence is ours. Kicking ourselves for the past decisions will not help. Now that the mega-FTA has been agreed upon among the 12 participating states, what is left is how to proceed from this point onward — to maximize the benefits and minimize the risks.
Once the full text of the agreement is disclosed in early November, we can fathom the real impact of the new rules included. And, more critically, then we can watch how other countries adjust themselves to implement the new rules. This is the advantage of the waiting strategy.
On the other hand, once Korea is ready and sends in its request to join, the accession fee can be quite high. Just like any group, once a group is formed by core members any new member desiring to join it afterward is expected (and requested) to pay an admission fee. This has been the case for trade agreements as well and quite a few accession negotiations have been brutal and difficult. As Korea is one of the most active trading partners with these 12 nations, it would not be surprising to see long lists of preconditions. Under this scenario, it is theoretically possible that despite Korea’s desire to join the mega-FTA, the accession fee may turn out to be prohibitively high because all these 12 countries are trying to settle all the outstanding bilateral issues at this juncture, in which case accession may become infeasible.
Since the announcement of the TPP breakthrough in early October, statements have been made indicating Korea’s interest in joining the agreement “at whatever costs.” Expressing the desire to accede by paying whatever it takes would not serve Korea’s interest. Nor would it solve the problems. It would only weaken Seoul’s position in future negotiations.
Given Korea’s economic status in the Pacific Rim, it does look odd if it does not participate in this mega-FTA with important new rules. So, all things being equal, it is reasonable to expect Korea’s participation in the agreement. But it is the terms and conditions of the accession that determine Korea’s ultimate accession. And it is still too early to tell.
With the announcement of the final agreement on TPP, all sorts of “what if” talks have been engulfing Korea. Monday morning quarterbacking really does not help anyone and the remaining, and meaningful, question is what to do next.
By Lee Jae-min
Lee Jae-min is an associate professor of law at Seoul National University. — Ed.