The Regional Comprehensive Economic Partnership (RCEP) – the world’s largest free trade bloc – South Korea joined with 14 other countries will open new markets for more than 90 percent of Korean export items, providing a breakthrough for the Korean economy that has been battered by Covid-19 impact, said Korean trade minister Yoo Myung-hee.

“More than 90 percent of Korea’s export items would be able to find new markets at a time of growing protectionism on the global trade frond amid the ongoing Covid-19 crisis,” Yoo said, in an interview with Maeil Business Newspaper last week. “This will offer a new path to local companies grappling with Covid-19.”

The biggest victory for Korea is the opening up of new markets for the country’s key industries such as automobiles, petroleum, steel, and chemical.

The new mega trade deal will allow 40 percent tariff on trucks to be reduced gradually to zero. Tariffs will also be eliminated on not only items of industry sectors led by the country’s big conglomerates but also small- and mid-size enterprises such as textile, machinery, and hygienic products.

The RCEP would even benefit the country’s agriculture sector, Yoo said, adding that it is different from other free trade agreements that often lead to bigger sacrifice of agricultural products.

Korean strawberries, for example, that are currently subject to nearly 40 percent tariffs, are a popular item among RCEP member countries. “There will be better and new opportunities (for Korean strawberries) in those markets,” the trade minister said.

Earlier this month, Korea signed the RCEP trade pact with 14 other Asia-Pacific countries – 10 Association of Southeast Asian Nations (ASEAN) member countries, Korea, China, Japan, Australia, and New Zealand – that cover nearly 30 percent of the global economy. The pact will go into effect as early as from the latter half of next year after receiving parliamentary ratification from each country.

Yoo, a graduate of English Language and Literature at Seoul National University, is the first female trade minister for Korea. Over her past 25-year career in trade, Yoo has been acknowledged for her role as Korea’s key FTA strategist including that of RCEP.

Yoo is also one of the two final candidates for top position at World Trade Organization (WTO). She is running against Ngozi Okonjo-Iweala, former Nigerian finance minister. Whoever becomes the next director-general will be the first female chief in the trade organization’s history.

During the interview, Yoo touched upon the criticism that the RCEP lacks effectiveness as it is an FTA participated by many countries.

“It is true that [the RCEP] is a large-built FTA as it involves the world’s least developed countries to the most advanced ones,” she said. “It could be seen as slow as tariffs will be reduced gradually over 10 years.”

However, Yoo noted that tariffs will be eliminated in the end, which will lead each country to make preemptive investments in a prompt manner on high expectation.

“This will immediately create new added value,” Yoo said.

She also noted that given the first step taken with Japan in terms of trade agreement, the priority for Korea was to protect local items considered less competitive against Japanese rivals such as materials, components, and equipment by excluding them from bound tariff.

If the United States President-elect Joe Biden requests Korea to take part in the Trans-Pacific Strategic Economic Partnership (CPTPP), Yoo said there is no reason “not to review” on the request as Korea is a country that has grown through multilateral trade. She added that until now, after the signing of RCEP, Korea has received no “whatsoever request from China with relation to CPTPP.”

“Many RCEP countries such as Australia is already a member of CPTPP,” and Korea should be an exception, she added.

When it comes to the ongoing WTO director-general selection process, Yoo said the result is “difficult to predict” as many discussions are currently in place among key countries and the U.S.

“It is difficult to jump to conclusions at this moment as the last selection procedure is an individual communication procedure of each member country as it involves forming a consensus on a single candidate instead of a vote,” Yoo said.

The progress has been slow as Geneva has banned gatherings of more than five people due to Covid-19.

In the road ahead for Korea, meanwhile, Yoo emphasized that the country should diversify its trade policy to include not only key countries but also others, which will help protect its market upon unexpected diplomatic events.

By Kim Dae-young, Oh Chan-jong, and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]