By Kang Seung-woo
Korea appears to be caught up in a familiar dilemma; between the United States and China with difficult choices to make.
Washington is promoting the Trans-Pacific Partnership (TPP), a U.S.-led free trade bloc for Asia-Pacific economies that involves 12 countries; while Beijing is urging Seoul to become a founding member of the Asian Infrastructure Investment Bank (AIIB).
The Park Geun-hye government has already been plagued by the U.S.-China clash for hegemony in Northeast Asia with a possible deployment of the U.S. missile shield, known as the Terminal High Altitude Area Defense (THAAD). Beijing, Korea’s No. 1 trading partner, fears that the deployment will interdict its missiles.
Acting Deputy U.S. Trade Representative Wendy Cutler said Monday that Korea is a “natural candidate” to join the Pacific trade deal.
“From the U.S. perspective, Korea’s membership meaningfully contributes to the value of the TPP and increases its benefits for other parties,” she said during a meeting in Seoul with the American Chamber of Commerce in Korea.
The government also hinted at Korea’s TPP participation.
“We are closely monitoring the progress in TPP negotiations,” Trade Minister Yoon Sang-jick told reporters, Wednesday. “We must carefully consider the kind of situation the country will face should Korea be left out of the great global value chain.“
He added: “In that sense, I believe we must actively consider our participation in the TPP.“
The TPP partners are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the U.S. Taiwan and Korea are also interested in the regional regulatory and investment treaty.
According to the Korea International Trade Association, a TPP is expected to encompass a trade region worth $9 trillion, with $2 trillion being intermediate goods.
However, Korea has yet to decide its TPP participation for fear of possible dashing China’s vision for free trade in the region, or the Free Trade Area of the Asia-Pacific.
At the same time, China has invited Korea to join the infrastructure bank that has already signed 27 countries to its founding membership.
If established, the AIIB is expected to undercut the U.S.-led World Bank and the Japan-led Asian Development Bank in the Asia-Pacific region.
Australia, Indonesia and Korea have stayed away from AIIB despite the interest they expressed.
Their failure to join is allegedly due to pressure from the U.S., which is worried about AIIB’s proposed governance structure.
China has offered $50 billion with a stake of up to 50 percent in the AIIB.
However, the government is on the verge of becoming an AIIB founding member, reported local media outlets, Wednesday.
“The government has persuaded the U.S. to understand Korea’s need to join the AIIB and it has made progress,“ a government official was quoted as saying by the Seoul Economic Daily.
Another official was quoted as saying that Seoul had told China that the AIIB needs to follow international standards and ease governance and transparency concerns.
AIIB participation is seen as a crucial opportunity for Korea in construction, given that infrastructure need in Asia-Pacific is estimated to reach $800 billion by 2020.