TPP: Complement or Substitute to APEC

Given the political and economic rivalry between key nations of the Trans Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP), a unifying free trade agreement such as the Free Trade Area of Asia-Pacific (FTAAP) agreement envisioned and pursued by APEC leaders faces steep hurdles. South Korea, a founding member of APEC, key ASEAN trading partner and RCEP lead negotiator, now considers whether to join the TPP. In light of South Korea’s APEC participation and its standing FTAs with all but two TPP nations, it is convenient to view the TPP agreement as complementary to Korea’s current trade agreements incubated via APEC and the APEC approach in general. The authors contend that the TPP is more akin to a substitute for the APEC approach. Acceding to the TPP for South Korea may possibly impede more flexible unilateral and preferential liberalization arrangements due to its stringent requirements and its water-tight-compartment-type demands for the fortified regulatory coherency. The paper considers how a “mega regional trade agreement such as the TPP will change current patterns of multi-track trade policy given that much of the multilateral TPP Agreement eclipses previous liberalization attempts initiated by the WTO and the OECD. Given potential conflicts between the TPP and RCEP programs, the authors recommend that Korea adopt a prudent approach to accession into the TPP and instead endeavor to make further progress on inter-regional cooperation between Northeast Asia and Europe.