To respond to changes in the trade environment, including U.S. tariff impositions, some argued that Korea should accelerate ongoing free trade agreement (FTA) talks and move quickly to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
According to a report titled "Free trade under attack: Trends in major countries' FTA discussions and implications" published by the Korea International Trade Association (KITA) on the 24th, major countries are strengthening cooperation across countries and regions in response to U.S. tariff measures. ▲ Signing new FTAs and resuming stalled negotiations ▲ Improving existing FTAs ▲ Joining plurilateral trade agreements.
Notably, the European Union (EU) concluded FTA negotiations with the Southern Common Market (MERCOSUR) and Indonesia, which had seen no progress for a long time following Donald Trump's election as U.S. president. It took 25 years and 10 years, respectively. The United Kingdom also succeeded in concluding FTA talks with India in May, 3 years after the talks began.
Korea, too, has actively concluded FTAs with most export destinations, and exports to FTA partner countries from 2020 to 2024 increased by an average of 5.1% per year. This outpaces the overall export growth rate (4.7%) and the export growth rate to non-FTA countries (3.7%).
As of last month, Korea had FTAs with a total of 59 countries. The gross domestic product (GDP) of these countries amounts to about 85% of global GDP. If FTAs enter into force with four parties that Korea has concluded negotiations with—the Gulf Cooperation Council (GCC), the United Arab Emirates (UAE), Guatemala, and Ecuador—the share of global GDP accounted for by countries that have FTAs with Korea is expected to increase by 2.2 percentage points (P).
The report also argued that Korea should promptly pursue CPTPP accession, which has a higher level of liberalization than existing FTAs, to boost exports. The CPTPP is a multilateral free trade agreement (FTA) formed by Asia-Pacific countries after the United States withdrew from the Trans-Pacific Partnership (TPP) and launched in 2018, and it is drawing attention as an alternative free trade bloc.
Current CPTPP members are 12 countries: Japan, Canada, Australia, New Zealand, Mexico, Chile, Malaysia, Vietnam, Singapore, and the United Kingdom, among others. As of 2020, the trade volume was $5.2 trillion, and nominal GDP stood at $10.7 trillion.
Kang Geum-yun, a senior researcher at the Korea International Trade Association (KITA), said, "Although we have already concluded FTAs with many CPTPP parties, the CPTPP is advantageous in terms of expanding export opportunities through improved market access, building stable supply chains, and reducing production costs," and added, "Leveraging Korea's mature FTA policy and experience, we should resume discussions on joining the CPTPP while preparing complementary measures to protect vulnerable domestic industries."