The New Landscape of Trade Policy and Korea's Choices

Two mega-regional negotiations are changing the landscape of Asia Pacific trade policy: an Asian track centered on ASEAN (the Regional Comprehensive Economic Partnership or RCEP), and a Trans-Pacific track centered on the Trans-Pacific Partnership (TPP) among 12 economies, including the United States, which Korea is expected to join. Modeling results suggest that both would generate substantial benefits for Korea and the global economy. From Korea's viewpoint, the agreements would establish new FTAs with China, Japan and smaller economies, improve the utilization of FTAs by permitting the regional cumulation of inputs, and help to upgrade some Korean FTAs to more rigorous standards. By participating in these agreements, Korea could also help to guide them toward inclusive, high-quality regional outcomes. As one of the region's most open and agile economies, Korea has a large stake in regional integration and would be well advised to pursue both tracks.