◇ Jeon Jin-young PD (hereafter Jeon Jin-young)> China’s official application for CPTPP membership. At first glance, the dominant analysis is that it is a move to contain the US and expand its economic influence. Cho Yong-chan, director of the Center for Economic and Industrial Research in the United States and China, for more details. hello boss how are you?
◆ Cho Yong-chan, director of the US-China Economic and Industrial Research Institute (hereinafter Cho Yong-chan)> Yes, hello.
◇ Jeon Jin-young> First, the name is very complicated and a bit difficult. The CPTPP is called the ‘Comprehensive Progressive Trans-Pacific Partnership Agreement’ in Korean.
◆ Cho Yong-chan> In the case of CPTPP, it was launched at the end of 2018. It is a multilateral trade agreement that aims to abolish tariffs on goods education among member countries, to allocate low tariffs on sensitive items by country, and to eliminate them for a long time. In the case of CPTPP, high market autonomy of more than 95% between member countries? So, we are pursuing a tariff elimination rate of 95%. It also aims to increase education focusing on agricultural products as well as industrial products among member countries. However, in the case of the TPP just before this CPTPP was launched, it can be understood as a free trade agreement excluding China in that it was used in terms of pressure tactics related to China.
◇ Jeon Jin-young> Then, where is the country you are currently in?
◆ Cho Yong-chan> There are 11 participating member countries. Japan, Vietnam, Malaysia, Brunei, Singapore, Australia, New Zealand, Canada, Mexico, Peru and Chile. That is, countries located in the Pacific Rim region. It accounts for 13% of global GDP. The share of trade volume is about 15.2%. At this level, it is the third largest after the North American Free Trade Agreement and China-led Regional Comprehensive Economic Partnership (RCEP). It is known that this is the reason why Korea did not join the TPP in a hurry in the meantime, since only 9 of the 11 countries that joined the TPP have signed a separate FTA.
◇ Jeon Jin-young> That’s right. I think it was because I thought it was okay not to join, but there are already countries that have signed FTAs. Are you aware that we are currently reviewing whether or not to join?
◆ Cho Yong-chan> Yes, it is. In Korea, too, we are continuing to seek membership. However, even if they try to join, they will inevitably incur a bigger loss than the countries that joined in the beginning. It is said that the current market tariff and market openness rate are said to be around 100% for countries wishing to join. In particular, if you look at the data presented by national research institutes, if the US participates in the TPP, which does not participate, the trade balance deteriorates, and Korea only opens the market. In particular, most of these 11 countries are large agricultural countries. As such, the seasonality of Korea is located in the opposite direction, so the damage to Korean farmers is not only great, but also because the fields in which we need to greatly allow access to the market include services, investment, and financial services markets. The government will continue to refer to it and discuss related issues, as it will have a huge impact on Edo, but it seems unlikely that full-fledged membership will come after the presidential election and next year’s local group elections.
◇ Jeon Jin-young> Yes, I understand. Now, with the US leaving, it has now become the CPTPP. Why did America fall out? What happened during Trump’s time?
◆ Cho Yong-chan> Yes, it is. During President Barack Obama’s time, he was trying to conclude the largest trade agreement with key allies and allies. However, after President Trump was elected, he signed an executive order declaring his withdrawal from the TPP. This was his election promise. It was pursued under a policy of promoting American industry, protecting workers, and raising wages. Because of this, the North American Free Trade Agreement and the FTA with Korea have also been renegotiated. Currently, even President Biden of the United States is talking about participating in the CPTPP, but the current atmosphere in Congress in the United States is that the U.S. national interest and voter-centered trade policy should be pursued. It looks like it would be difficult to do.
◇ Jeon Jin-young> Oh, that’s right. President Biden has some intentions, but it is not easy to get Congressional approval. Then, when we first started as TPP, our goal was to eliminate trade tariffs and build an economic community in this Asia-Pacific region. Have there been any changes since the U.S. left and then became CPTPP?
◆ Cho Yong-chan> Apparently, the market opening has widened considerably. In addition, a lot of content related to the 4th industrial revolution was included in the market and openness. The CPTPP is called the 21st century trade rule. This is because we are promoting the highest level of market openness and liberalization not only in the product field, but also in the service and investment field. In addition, it opened the market in a wide range of fields, including intellectual property issues, financial services, e-commerce, state-owned enterprises, non-tariff barriers, as well as regulations on the environment. Since it is the RCEP signed by 15 countries, including Korea, the Regional Comprehensive Economic Partnership Agreement was also applied as it was, so it is correct to view the CPTPP as the basic bible for all trade agreements in the 21st century.
◇ Jeon Jin-young> Oh, that’s right. So, China has now submitted an application to formally join the CPTPP. Any reason?
◆ Cho Yong-chan> It seems to be carried out with three main intentions. In the case of President Biden, the level of pressure on China is gradually increasing. China is trying to strengthen economic relations around the world by using free trade as an excuse. Because of this, it helps to weaken the siege of China by the United States and Western countries. Second, we can increase our allies in the international community. In this way, China’s economic isolation can be escaped. Finally, China will make its own rules for the world economy on behalf of the United States, using access to the domestic market as a weapon. This has been confirmed by the WTO, and now the CPTPP is also forcing it to be this year and next year. In the RCEP, which will take effect in January next year, China is making economic rules, and it is a finished version. This is a goal pursued under the national strategy, not just a hand, from China’s point of view, because if the CPTPP is approved, it will also help President Xi to confirm that his term will be extended at the party congress next fall.
◇ Jeon Jin-young> That’s right. By the way, you mentioned earlier that the possibility of approval by the US Congress is not very high. ?
◆ Cho Yong-chan> In the case of CPTPP, it is a very difficult situation for the United States because there is a tendency toward the Chinese market, which has a large regional market. For this reason, the United States declared that it cannot join China because it has a non-market economy and trade practice. Also now in Australia, China has banned imports of Australian bituminous coal, beef, barley, cotton, wine and lobster after China excluded Huawei from its 5G network. Australia is also against it because there is usually a lot of friction. Vietnam is also said to be denied accession due to territorial disputes in the South China Sea. The problem is that even if China joins it, it seems that it will not be able to accept a high level of feudalism. The biggest problem is that China is unable to comply with data rules and global standards when it comes to protecting government procurement market intellectual property rights. In particular, in relation to the Data Safety Act, more than 50 laws to control data have been pouring out recently. For this reason, I think that there is no reason for Western countries to accept this in the future because they are making requests for source code disclosure to Western countries.
◇ Jeon Jin-young> Then, director, how does the approval process take place if I apply for membership? Could it be that the approval is not accepted?
◆ Cho Yong-chan> Yes, it is. To approve it, trade ministers from 11 countries gather to talk about it. The most important thing here is to accept global standards in order to join the CPTPP. Among them, it is checked whether there are any discriminatory principles of foreign companies in the information procurement market, or whether there are any exclusions of foreign companies for security reasons. Tariffs, investment rules, environmental labor conditions. In China, multiple unions are not permitted. In the case of 580,000 private innovative companies, there is a union made up of party members called Crafts, which also controls the board of directors. In addition to this, since we are constantly requesting the release of source code from foreign companies, there must be proof that this practice has disappeared, but it seems that it will take quite a while to confirm this.
◇ Jeon Jin-young> I see. As a result, we cannot determine with certainty now whether or not the membership will be approved, or when it will fly. However, there are analyzes like this that, in any case, the battle for supremacy between the United States and China has rekindled over this event. But in fact, after Biden took office in the United States, when I compare it with President Trump and former President Trump, I feel that the conflict seems to be less visible than before. How do you see the manager?
◆ Cho Yong-chan> Do not accept diplomatic expressions or actions as they are. In the case of President Joe Biden, it was the last 9 days, right? During the phone conversation with Xi Jinping, we talked about avoiding clashes, and that we should cooperate with each other on climate change and the recovery of the corona economy. However, there are rumors that this content is a soft expression as it is, and that the pressure inside it was quite a bit high. In the case of President Biden, he has not announced any clear policies on China in the past six months. But it’s Chuseok, and on the 21st, there is the 76th UN General Assembly. Here we present our new China policy on China. It contains measures not only to restore the US leadership in the international community, but also to restore and unite the alliance. In addition, based on this, it is said that he will reveal in detail how he will implement China’s policy. The first stage related to that will be the Quad Summit held in Washington on the 24th. Here, it seems that they are going to block China’s influence in the areas of Taiwan’s security issues, the Indo-Pacific region, and cutting-edge technology related to semiconductors, vaccines, climate change, and space. Not only this, but at the G20 summit in Rome in October, it seems that China will hold the reins of China isolation by discussing human rights, genocide, the South China Sea issue, and hacking by Western companies. The policy and conflicts between Western countries are expected to intensify.
◇ Jeon Jin-young> Starting with the UN General Assembly next week, the eyes of the world are likely to be focused on what words will come out of President Biden’s mouth. Then we have to take a look at this part. What should we do in this situation? In fact, do we have to say that we are at a crossroads of choice every time? We are always in a difficult situation because we are always stuck between the United States and China. How do you see whether it is right for Korea to join the CPTPP or should we be more cautious?
◆ Cho Yong-chan> There are reports in the newspapers that if you don’t join even now, only Korea will be a loner. However, in my view, it is clear that the loss is greater than the economic benefit of joining. According to the report of the national research institute, if most of the agricultural countries that the US did not participate in join the CPTPP, our trade balance will inevitably deteriorate. Also, because it only opens the market, the net profit is not great. Moreover, in the case of countries wishing to join now, it is possible to join only when the market opening rate reaches 100%. This will inevitably increase the burden on Korean farmers. Also, as the market related to machinery and automobiles, which is the most important, expands further, the market related to private items in Korea may contract. Therefore, it seems that the decision to join is difficult for the government to make within a year or two.
◇ Jeon Jin-young> Is there any possibility that China will pressure you to join?
◆ Cho Yong-chan> Even in China, they want to continue to act together to make their own allies. However, from our point of view, national interests come first, and it is difficult to go together with China, especially for security, relying on the United States. Since most of the export items in our market are processed in China and exported to the United States or Western countries, it seems that even if there is pressure from China, a decision will be made based on the national interest in relation to this accession.
◇ Jeon Jin-young> I see. And the EU is now trying to contain China. We are currently pursuing a trade agreement with Taiwan, and the possibility of signing this digital partnership agreement with Korea, Japan and Singapore is being discussed.
◆ Cho Yong-chan> In the case of the United States, the quadruped countries and the Five-Eyes countries are centered on the pressure of China. Now, beyond the month of October, it is said that parts related to technological cooperation, free trade agreements, and digital trade will be promoted in earnest between democratic countries excluding China. It is highly likely that the establishment of a new supply chain excluding China will accelerate. Because of this, since China has been alienating the ceremony through preferential policies with subsidies in the future, there is a high possibility that the pressure front on China that applies the US-led global standard between countries excluding China will materialize in the future. Also, if this happens, Korea will have no choice but to raise the level of conflicts with China from next year, so if Korea does not set up a high-level negotiation channel related to China even for a moment, the national interest will be damaged if such conflict arises. It seems like this can also cause.
◇ Jeon Jin-young> Oh, that’s right. All right. I will listen to you today. Thank you.
◆ Cho Yong-chan> Yes Thank you.
◇ Jeon Jin-young> So far, I have been the director of the US-China Economic and Industrial Research Institute, Yong-chan Cho.
YTN Jeon Jin-young (jyjeon@ytnradio.kr)
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