Tariff war pushes Korea to revive bid to join Japan-led CPTPP trade bloc

Farmers, fishermen and other activists hold a rally in front of Seoul Station to protest the government's plan to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), July 12, 2022. Yonhap

Korea is moving to revive a bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), an Asia-Pacific trade bloc led by Japan, as it grapples with a global tariff war.

The renewed push comes in response to U.S. President Donald Trump’s sweeping global tariffs, which are exerting pressure on export-reliant economies such as Korea to secure alternative markets and supply chain partners.

The Lee Jae Myung administration has repeatedly expressed interest in joining the CPTPP, and on Wednesday confirmed that a potential membership in the trade alliance is under review.

“We’ll review the CPTPP in order to secure an economic alliance network with countries that share similar positions,” the Ministry of Economy and Finance said in a press release after a meeting of economy-related ministers, presided over by Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol.

Trade Minister Yeo Han-koo also emphasized the need for a strategic overhaul of Korea’s trade policy.

“It’s time to diversify our export markets and begin strategic reviews of agreements like the CPTPP in the midst of intensifying U.S.-China trade tensions,” Yeo said during a Cabinet meeting on Tuesday.

Lee also signaled Korea’s interest in joining the CPTPP on the occasion of the Korea-Japan summit in Tokyo, Aug. 23.

He emphasized in a Yomiuri Shimbun interview the need for “groundbreaking economic cooperation to go beyond the current levels in trade, investment and exchanges.”

In a separate interview with Nihon Keizai Shimbun, he called for the creation of “an economic cooperation body among Pacific Rim countries, including those in East Asia.”

Launched in March 2018, the CPTPP is a multilateral free trade agreement (FTA) comprised of 12 countries — Japan, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United Kingdom and Vietnam — representing approximately 14 percent of global gross domestic product (GDP).

Japan played a leading role in launching the CPTPP after the U.S. withdrew from the original Trans-Pacific Partnership (TPP) in 2017, during Trump’s first term.

Korea first considered joining the CPTPP in 2021 under the Moon Jae-in administration and again under the Yoon Suk Yeol administration.

However, no significant progress was made due to conflicting interests involving farmers, fishermen, labor groups and politicians, as well as challenges posed by the COVID-19 pandemic and deteriorating bilateral ties with Japan.

A study by the Korea Institute for International Economic Policy (KIEP) suggests that joining the CPTPP could raise Korea’s GDP by 0.38 percentage points.

Economists also note that Korea currently lacks bilateral FTAs with major CPTPP members like Japan and Mexico, making the trade pact an important gateway to those markets.

“The strategic value of CPTPP has become even more important as the Trump administration’s tariff policies took full effect,” said Shin Se-don, professor emeritus of economics at Sookmyung Women's University.

Shin believes that U.S. trade protectionism has elevated drastically under the second Trump administration, even compared to the first.

“The CPTPP approach therefore should be undertaken to best serve our national interests,” he said.

Kang Moon-sung, a professor at Korea University’s School of International Studies, said, “We may have missed the ideal timing, but it’s still a positive step that the government is reconsidering CPTPP membership now.”

A government official said on condition of anonymity that minimizing adverse impacts on the agricultural sector is key to joining the CPTPP.

He referred to a 2022 study from the Korea Rural Economic Institute (KREI), which showed that if 98 percent of agricultural tariffs were immediately eliminated through CPTPP membership, the agricultural sector could suffer annual losses of up to 440 billion won ($315.66 million).