YouTube Link: https://www.youtube.com/watch?v=flDTNZPhJJY

The East Asia Institute (EAI) hosted the seventh session of its online seminar series, "COVID-19 and the New World Order," titled "The Disrupted International Trade Order: Strategies for the United States and Korea." The international trade order has recently been thrown into disarray by the rise of U.S. protectionism, China's return to state capitalism, and the deglobalization trend in the COVID era. The expansion of the CPTPP has become a major issue, with increasing interest in accession from countries such as South Korea, the United States, the United Kingdom, China, and Taiwan. This seminar featured in-depth discussions on the impact of U.S.-China competition on the international trade order, the benefits and gateway of CPTPP accession, the challenges facing the CPTPP, and South Korea's policy direction within the evolving trade order.

• Date: Wednesday, July 7, 2021, 10:00–11:00 (KST)
• Speakers: Mireya Solís (Director, Center for East Asia Policy Studies, Brookings Institution), Lee Jae-min(Professor, Seoul National University), Lee Wang-hui (Professor, Ajou University)
• Moderator: Park Tae-ho(Director, International Trade Institute, Lee & Ko)
• Opening Remarks: Son Yeol(President, EAI; Professor, Yonsei University)

Summary: South Korea Should Accede to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP): Benefits and Challenges of Accession

I. Why CPTPP?

Preventing U.S.-China Strategic Competition

• The strategic competition between the United States and China has led to the securitization of trade, causing disruptions in the international trade order. This has enabled both countries to misuse the pretext of 'national security' in regulating trade and investment. Therefore, middle powers must strengthen their trade diplomacy and solidarity to overcome the instability in the international trade order through the conclusion of mega FTAs.

Strengthening Relations Through Economic Interdependence

• During the Trump administration, the United States declared its withdrawal from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), leaving it with the challenge of restoring credibility and avoiding isolation within the international community. The U.S. can strengthen regional ties through multilateral agreements with countries sharing similar objectives, based on the Intellectual Property Chapter. By rejoining the CPTPP, the U.S. can compete more effectively with China and build reliable supply networks.
• South Korea can develop bilateral relations, such as those with Japan, by strengthening economic interdependence through CPTPP accession. Non-economic solutions are needed to resolve political tensions between South Korea and Japan. However, if both South Korea and Japan join the CPTPP, it will help foster a more normal and friendly relationship through norm-building. CPTPP participation will contribute to norm-building overall and aid in pursuing other negotiations based on these norms.
• Professor Lee Wang-hui emphasized preventing political sensitivity through economic interdependence and presented the case of Taiwan. The "One-China Policy" economically and politically constrains Taiwan, yet it has continued to grow, becoming China's largest importer in 2020. Professor Lee predicts that Taiwan may participate in the CPTPP in the future, as international demand for its semiconductor production has boosted its national competitiveness.

II. Challenges of CPTPP Participation

• Many countries beyond the U.S. and China are showing interest in joining the CPTPP. The UK, as the first country to officially begin accession procedures, will serve as an important precedent for other aspiring members. However, questions have been raised about the effectiveness of the UK's participation in the CPTPP due to geographical factors.

Challenges Facing South Korea: Accession, Negotiation, and Threats to Domestic Industries

• While South Korea's commitment to officially accede to the CPTPP remains uncertain, the Biden administration's inauguration has laid a positive foundation for CPTPP accession. South Korea had the opportunity to become one of the founding members in the past. However, participating in the CPTPP today will incur significant costs and require a challenging negotiation process for accession.
• Professor Lee Jae-min pointed out that the accession process requires unanimity among the 11 member states, raising questions about the strength of South Korea's negotiating power within the CPTPP. While U.S. participation could alter the negotiation dynamics, its accession is unlikely in the near future.
• The issue that the CPTPP is an outdated agreement in some areas remains. For example, CPTPP member states have concluded independent digital trade agreements, and New Zealand, Chile, and Singapore have also signed a trilateral digital trade agreement. These agreements have a higher standard than the CPTPP's E-Commerce Chapter, necessitating an update to the CPTPP's standards.
• South Korea has signed FTAs with 9 out of the 11 CPTPP member states, excluding Japan and Mexico. Director Park Tae-ho believes that Mexico's reluctance to engage in an FTA with South Korea stems from the assessment that it would not yield significant benefits for Mexico. From South Korea's perspective, considering Japan's membership in the CPTPP, there are concerns that CPTPP accession could negatively impact the domestic automotive industry. However, Director Park noted that Japanese automobiles are already being imported into South Korea through the Korea-U.S. FTA.
• The requirement for unanimous consent from all 11 member states for CPTPP accession could pose a challenge for South Korea. Director Park, however, anticipates that South Korea can overcome difficulties, as the CPTPP differs from bilateral FTAs. South Korea needs to apply for CPTPP membership. Following the UK's example, it could initiate individual consultations and withdraw its application if existing members impose harsh accession conditions.

III. Concerns Regarding U.S. and Chinese Accession to the CPTPP

• Since Biden's inauguration, trade policy has not reflected a fundamental shift in his foreign policy stance that the U.S. will lead the international system again. The U.S. still imposes steel quotas on South Korea and maintains tariffs on China. Mireya Solís, Director of the Center for East Asia Policy Studies at Brookings Institution, stated that while substantive changes have not yet occurred, Biden will adopt a more constructive attitude when discussing WTO reform and is willing to engage in discussions with allies. Furthermore, she emphasized the importance of having a president who does not view economic gains and losses as the sole measure of trade.
• Amidst strategic competition and trade wars, there is debate about China's interest in joining the CPTPP. However, if China were to join the CPTPP, it could harm other member states by demanding exemptions or conditions for its accession.
• Assuming both China and the U.S. join the CPTPP, this situation could threaten the ongoing middle power trade diplomacy and potentially stall progress due to the subversion of strategic competition between the U.S. and China.

IV. WTO Reform

Lack of Capacity for Innovation and Rule Enforcement

• The COVID-19 pandemic has exposed the vulnerability of current Global Value Chains. In developed countries, political support for widespread protectionism is growing in reaction to neoliberal globalization. Developed countries are implementing managed trade in international trade and open rule-based trade systems to protect internationally uncompetitive sectors, regions, and workers.

Key Industries and Subsidy Agreements

• • With the increasing recognition of key industries in many countries, the international community has seen substantial support for manufacturing related to semiconductors and infrastructure. As many countries, including the United States, consider large-scale support for these industries, the current weak subsidy agreement within the WTO clearly demonstrates how outdated the WTO's capabilities are. There is a near absence of measures for critical issues such as COVID-19 response measures, support for the coal industry, and environmental protection measures, and the WTO cannot distinguish between beneficial and harmful subsidies, leading to agreements and support measures at the individual country level. These issues cause disagreements and conflicts between countries that are dissatisfied with each other's agreements. ■

V. Speaker and Moderator Biographies

• Mireya Solís_Director of the Center for East Asia Policy Studies and Philip Knight Chair in Japanese Studies at the Brookings Institution. She holds a bachelor's degree in international relations from El Colegio de México and a Ph.D. in East Asian Studies and Political Science from Harvard University. She is an expert on Japanese foreign economic policy, U.S.-Japan relations, international trade policy, and Asia-Pacific economic integration, and previously served as a professor in the School of International Service at American University. Her major publications include Banking on Multinationals: Public Credit and the Export of Japanese Sunset Industries, Cross-Regional Trade Agreements: Understanding Permeated Regionalism in East Asia (co-authored), and Competitive Regionalism: FTA Diffusion in the Pacific Rim. Her recent book, Dilemmas of a Trading Nation, which offers a novel analysis of trade policy-making processes in Japan and the United States, received the Masayoshi Ohira Memorial Award in 2018. She has contributed expert commentary to The New York Times, Financial Times, Washington Post, Los Angeles Times, Politico, The New Yorker, Nikkei, Kyodo News, Asahi Shimbun, Jiji Press, Japan Times, NHK World, Bloomberg, CNN, and BBC.
• Lee Jae-min_Professor at the School of Law, Seoul National University. He holds bachelor's, master's, and doctoral degrees in law from Seoul National University, as well as a doctorate in law from Boston University School of Law and a master's degree in law from Georgetown University Law Center. He worked for the Ministry of Foreign Affairs after passing the 26th Foreign Service Examination. He practiced law at Willkie Farr & Gallagher LLP in Washington D.C. and previously served as a professor at Hanyang University's School of Law. His main research areas are international law (international trade law, international investment law).
• Lee Wang-hui_Professor of Political Science and International Relations at Ajou University. He holds a Ph.D. in International Politics from the London School of Economics. His main research areas are international political economy and corporate-state relations. His co-authored books include "The Belt and Road Initiative: China and Asia" (2016), "East Asian Regional Governance and Transnational Cooperation" (2019), and "A Study on Economic Cooperation Measures Among South Korea, North Korea, and China" (forthcoming). His major articles include "Geopolitics of the Belt and Road Initiative: Sino-Russian Cooperation vs. Linking Russia to Counter China" (National Security and Strategy, 2017), "The Political Economy of Fintech: Competition Between the U.S. and China" (National Strategy, 2018), and "U.S.-China Trade War: Resistance to Protectionism within the U.S. and China's Lobbying Efforts in the U.S." (National Security and Strategy, 2018).
• Park Tae-ho_Director of the International Trade Institute at Lee & Ko and Professor Emeritus at Seoul National University. He graduated from Seoul National University with a degree in Economics and obtained a Ph.D. in Economics from the University of Wisconsin-Madison. He served as Korea's Chief Trade Negotiator (2013-2014), Minister for Trade of the Ministry of Foreign Affairs and Trade (2011-2013), and Chairman of the Korea Trade Commission (2007-2010). He was also a visiting scholar at Stanford University and the World Bank (2004) and a visiting scholar at the International Monetary Fund (1998). He served as Dean (2006-2010) and Professor at Seoul National University's Graduate School of International Studies, and as an Assistant Professor of Economics at Georgetown University. He also held positions as Vice President and Research Fellow at the Korea Development Institute (KDI) and Research Fellow at the Korea Institute for International Economic Policy (KIEP). His books include "International Trade Theory" (co-authored, 1998), "Principles of International Economics" (co-authored, 2002), and "Understanding the Korean Economy" (co-authored, 2005).

• Managed and Edited by Yoon Ha-eun, EAI Research Fellow
  
  Contact: 02 2277 1683 (ext. 208) | hyoon@eai.or.kr

Video Transcript

Hello, welcome to East Asia Institute (EAI)'s online webinar. I am Son Yeol, President of EAI, and your host. Today's topic is "International Trade Order in Disarray: Possible Strategies for the United States and Korea." This is part of the "COVID-19 and the New World Order" webinar series. In the past few years, the world has witnessed a significant disruption of the international trade system and the rise of managed trade. There are three sources, I think. One, there is widespread protectionism, particularly among the advanced

industrial countries, mainly due to the backlash of neoliberal globalization. We see increasing political support, and often popular support, for protecting the losers from trade, which are internationally uncompetitive sectors, regions, and workers. Second, there is U.S.-China strategic competition, which contributes to the disarray of the system. Strategic rivalry causes the securitization of trade, as states use trade as a means to foreign policy and manage trade in the name of national security. So here, there are misuses

or overuses of invoking national security in regulating international trade and investment. Finally, COVID-19, which draws our attention to the vulnerability in global value chains, which makes a national security problem as well. So here, states regulate exports of strategic goods while expanding imports of those, which is in contrast to the usual protectionism that restricts imports and encourages exports. So all this presents an enormous challenge to trading states like South Korea. So we are here to address these issues

and find solutions regarding how to stabilize and recover the international and regional trade order or rules-based trade order. What roles the United States and Korea can take, how both countries can cooperate, and what areas should be focused to inform policy decisions for the countries. So, to discuss this topic, I am honored to be able to host excellent panelists today. Let me introduce our first speaker, Dr. Mireya Solís. My good friend, Mireya, is Director of the Center for East Asia Policy Studies, Philip Knight Chair in Japanese Studies,

and a Senior Fellow in the Foreign Policy Program at Brookings Institution. Prior to Brookings, she was a tenured associate professor at American University's School of International Service. She received her Ph.D. from Harvard University. An expert on Japanese foreign economic policy, U.S.-Japan relations, and international trade policy and Asia-Pacific economic integration, her most recent publications include "Dilemmas of a Trading Nation: Japan and the United States in the Evolving Asia-Pacific." Our second speaker...

is professor jamin lee who teaches at seoul national university law school dr lee received ll.m of nphd in law at seoul national university and his jd at boston college and llm at georgia washington university uh prior to snu he was a lawyer at the washington-based wilkie far and gallagher lpp and also served as a career diplomat at the rok ministry of foreign affairs his main area of interest is international trade law and international investment law our third speaker is professor wang phi li of

uh aju university um he is currently serving as a dean of the division of the international studies he is a regular participant of eai events and research projects he's a ea scholar his main interest area of interest has been the issues of political economy of economic policy and institutions in east asian countries with special focus on china and south korea his recent publications include politics of economic reform in korea pulling south korea away from chinese orbit um and uh crisis management of the covet

19 pandemic in south korea taiwan hong kong and singapore um professor lee received his phd from uh london school of economics and political science um our moderator today is uh dr terror bach currently president of the lee and co global commerce institute president park park had a you know distinguished career he served as a minister of trade from 2011 to 13 and the ambassador at large for international economy and in trade from 13 to 14 prior to that he was a long-time professor at seoul national university a

leading scholar in international trade dr bark also served the vice president for the korea institute for uh international economic policy key app and an assistant professor of economics at georgia washington university i'm really honored to be able to invite president park as today's moderator so now over to you president park washington university i just want to correct that uh can you hear me yes no okay well i'm the moderator of today's webinar i would like to really thank professor sonyo and the eai for hosting

this online webinar on the very tiny topic regarding international order strategic competition between the us and china and also a lot of influences on other countries including south korea i was going to introduce our excellent panel list but already personal introduce in detail the background of each panelist only thing i want to do is time allocation we are given i think 53 minutes for our discussion so i have to manage the time very tightly and the organizer gave me i don't know the reason but

give me very specific time allocation different minutes for different people okay uh after we hear panelists presentation as the organizers already told you we would like to answer some of the questions collected from the online participants maybe in korea and or south korea korea but if there are not enough questions and we still have time then we have a short session to discuss among uh panelists that's how i run this webinar without further ado i'd like to invite the first panelist dr mariah solis to speak on the

international trading order in an area of strategic competition and implication for south korea dr solis yes 13 minutes 14 minutes okay yes thank you so much president parker it's a honor to be here with you in this event and with the other distinguished uh panelists and thank you uh very much for the kind introduction you all um and i am very grateful to the east asian institute for the invitation so in my uh brief remarks i want to touch on three issues the crisis of the trading system the growing importance of middle power trade

diplomacy and opportunities for u.s re-engagement and offer some thoughts on what i believe are some of the most important choices that south korea faces ahead so very briefly um i'll start with a very gloomy uh this depiction of the current state of the international trading system unfortunately i think it's not an exaggeration to say that the rules-based trading system faces an existential crisis because the challenges come from many directions there is of course something that has been with us for quite a while and that

is a wto dysfunction first manifested in the stagnation of the negotiation process the fact that wto has had a very difficult time updating the toolkit of rules of trade and investment to keep up with the realities the changing realities of the world economy add to that now the crisis in the enforcement arm of the wto with the applet body seizing operations this then raises a problem that we may not be able to enforce the existing rules so we're not innovating enough and we're not perhaps enforcing the body of rules that we have

another very important stress that the international trading system is suffering comes from great power competition between the united states and and china and then and i'll explain that in more detail but then the other third factor is something that has already been mentioned and that is a pandemic shock and i think that it has been very discouraging to see that expert protectionism has been on the rise it has affected medical supplies personal protection equipment vaccines but also that we see more and

more pressures or rhetoric around the question of the globalization of bringing home supply chains i think that across the board renationalization of international production is not feasible it's not advisable but nevertheless the fact that these pressures are growing represents a challenge for existing uh patterns of economic interdependence but i think that i want to spend more time giving more texture to the nature of u.s china strategic competition and what this means for the international trading

system in my mind china's recommitment to a state capitalism model to achieve self-sufficiency in high-tech sectors and the sectoral restrictions it imposes on foreign direct investment practices such as forced technology transfer and digital protectionism have created a great strain on the trading system so we have a china that seems to have less appetite for economic reform but is much more consequential to the international uh trading system on the other hand the united states has had some quite tumultuous uh

years to be quite frank and the trump administration embraced the notion of america first and pursued an america first-rate policy which had profound consequences given the significance of the united states in the trading system and if i were to characterize the approach of the trump administration i would say that it was deep skepticism of multilateralism in particular the wto the resort to the tariff as a main tool to try to achieve its objectives and tires unilateral tires that were applied on allies and

rivals alike and tires that we used as a negotiation leverage with china and they resulted in what we call the phase one trade deal which was really just the truth of sorts and i think that it did not really touch on the core issues around chinese industrial policy that motivated the exercise to begin with but they did produce some series of massive commitments in the order of 200 billion dollars from china to purchase american goods and these commitments were unrealistic but also trade diverting so

again the rules-based trading system took a hit and that to that one other thing that we saw frequently during the trump years and is not going away is the use of the so-called national security tyres uh um they were applied to metal and aluminum and what did this this did is that because they were applied fundamentally and partners and allies they prevented coordination to address a um china challenge uh the united states has been concerned with the leakage of critical technology to china and therefore has adopted many defensive

economic measures you know tighter screening of foreign direct investment there is a revision now under on the way on the export control regime to cover foundational and emerging technologies and the u.s government has placed several chinese technology firms on the entity list which means that sales of the most advanced chips and other components are now restricted and china seems to be gearing up to retaliate in kind having adopted recently an export control law and more recently the counter foreign sanctioned law

so there's a lot of tension between the two largest economies in the world and there's a a lot of securitization or politization of international economic exchange going on now if there is a note of hope i would say in this difficult landscape i think it's a greater initiative demonstrated by middle powers in moving forward mega trade agreements such as a comprehensive and progressive trans-pacific partnership trade agreement and the regional comprehensive economic partnership agreement and let me just say a word on

each of these mega trade agreements and why they're so significant i think that when the united states walked out the door and left the tvp abandoned the tpp after he had been signed but not yet ratified there were a lot of doubts as to where this agreement could actually survive and i think it has to do the ability to rescue these uh trade agreement which is a very ambitious trade agreement in terms of the rules in terms of the type elimination uh targets i think i i think we should um really give credit to the pragmatism of

the remaining 11 countries uh because what they decided to do was to keep the type as schedules intact and then just talk about the suspension of narrowly defined rules in the new agreement on areas that only americans had championed and once the americans had left it made sense to suspend other applications and most of them had to do with intellectual property provisions now why is the tpp so important i would i would make the case that it's for middle powers now it provides a way to hedge against the adverse

trends of chinese mercantilism and u.s retrenchment and the question that the cptp now faces is its potential growth and the promise of this agreement was always is always laid on the fact that it's geared to expand to bring new members now it is a uk who has now been the first country to formally initiate the accession uh talks and i think this would give us a good sense of how the process will work out if it's nimble enough to bring other members and there is some signals coming from china that they're also interested in joining

the cptpp i would be very positive about such development if china was willing to really abide by the high standards of the cptpp but to be quite frank i'm not seeing that appetite for far-reaching reform the way in which we knew that china wanted to use the accession to the wto to leverage significant change for the domestic economy that doesn't seem to me uh to be the spirit driving uh chinese interest and therefore it would be important to make sure that any such conversation would not result in lowering

the standards and level of ambition of the cptpp regarding the regional comprehensive economic partnership quite frankly it's the largest trade agreement once it enters into force and the combination of tire reductions linear rules of origin and liberalization of foreign direct investment and services i think will have a very uh solitary effect in boosting regional production networks i think that one hallmark of a successful trade negotiation and here i of course defer to president bark because he has he's the practitioner

but one hallmark would seem to me that countries come away from the negotiation feeling that they each pocketed a win and therefore they have a stake in seeing the success of this trade agreement i think for asean it was a high noon for its regional diplomacy and they were able to sustain the principle of asean centrality for the three northeast asian economies china south korea and japan this is the first time that you have preferential trade trade among the three largest uh economies in northeast asia and

therefore there's expected to be large gains from trade but i think that even though china was not the main driver of these negotiations china accomplished a lot because it did not have to surrender many of its rules of industrial policy and nevertheless it blunted this narrative that the world is decoupling from china hard to make that case when china is part of the largest trade grouping in the world now the common denominator between cptpp and rsep is that the united states is not there and that is of course a great

problem for the united states i think that the challenges that the united states faces is marginalization from the regional economic architecture and a need to boost its credibility after abandoning the cptpp i think there's a lot like in dividing agenda in terms of focusing on you know boosting the domestic safety net thinking about infrastructure thinking about domestic competitiveness re relaunching or nurturing alliances and partnerships but there's one big gap here uh one gapping hole we don't have a proactive trade strategy

going forward so i think that there's plenty of things that the united states and south korea could do together in terms of coordinating uh to boost supply chain uh resilience in terms of negotiating digital uh trade agreements um in terms of you know thinking about kobe response but i think at the end of the day the united states should find its way back to the cptpp and i think that south korea should do as well my last observation because i don't want to abuse the time given to me is as follows what are the implications

of all these trends for south korea i would say that as an open technologically advanced trading nation south korea's stakes in the preservation of the rules-based trading order could not be higher and to that end um as i said before south korea could cooperate with the united states in ensuring the viability of supply chains disseminating rules for the digital economy but there's one area where my advice is going to be for our south korean friends to go ahead of us in i would recommend exploring uh

and joining uh the cptp i don't see the united states making any decisive move on that front trade promotion authority expired last week nobody seemed to complain and that's why i think they would be good to add the heft of south korea to the cptpp and that could increase incentives for the united states thank you very much well thank you dr solis you also speak you know very uh within the time limit so that we can move on uh very efficiently for our webinar i now invite professor jamie lee to speak on reassessing

cptp in the changed global trading landscape professor lee i will give you eight minutes please thank you thank you minister bach i also would like to thank uh east asia institute and president tusson for organizing this event and inviting me for this very important topic i just would like to share what was just explained by dr solis i i to share the views and conclusions that dr solis just mentioned perhaps i could add a couple of things uh to to to to to invigorate our discussion today first of all with respect to the wtl i

think now uh the again using the term dr solis just used uh we are now at uh the the the stage of ig essential risk for the wto and multilateralism and we should do something uh something specific and very fast and mg12 is coming up soon in december and that will be a critical point a critical moment for the global community to find some some signs of signs of restoring multilateralism i think perhaps we should focus on just easy things not the difficult things just easy things to to to send them to send the message that

wto is now at least working to find some solution just perhaps two things number one again uh as taxes always mentioned i think the first issue is and it should be how to restore the function of the appellate body still there's a long way to go and now nobody's there in the seven member body there's nobody's left for the appellate body and it is critical to find a compromised solution to restore their pellet body and resume the function of the palipadi by appointing seven members for the restoration of the

function of the palipadi as soon as possible i think that's the first thing that we should focus on it will be difficult but still that seems to be something doable as long as uh the states and the members of the wto can find some compromising ground reflecting the concerns of the united states which are well known by now and the concerns of other countries such as eu japan and other countries as well i think some compromising ground can be found secondly i think we should focus on the fisheries

subsidies i understand that the negotiations on the fisheries subsidies are the most advanced at this stage and this is the area where states have the the strongest commonality so to speak in finding the final endgame if that is the case then perhaps the wto members can focus on fisheries subsidies and finalize it at least at the mc 12 stage so perhaps if we can do at least those two things then those two things can provide some meaningful c's to uh to to revive the discussions uh and uh and the the the the debates

on how to reform the wto reform the wto for the future including industrial subsidies and all those important subjects so perhaps those those two things could be uh the priority issues for the time being in my view and in the meantime again let me underscore the issue dr solis just mentioned which is middle power and the role of the cptpp and uh sap well with respect to the cptpp korea is is now trying to join the cptpp uh sometime soon in retrospect korea should have joined tpp and cptp negotiation as an original

member but now korea is trying to to join the cptpp as a new member and there are many questions to be answered in the process and again as a trading nation and as a a a state which supports strong multilateralism i think cptpp is a good option for korea it's a mega fta along the asia-pacific region and i think korea should join cptpp uh if at all possible uh in the past and now now more than so now because of the again the faltering multilateralism and uh the bleak situation at the wto i think cptpp is a good option

for korea to pursue at this stage at the same time the question is the admission fee or the membership fee it could be it could be an easy accession but it could be a very difficult accession for crea if you look at the accession protocol accession document next to the cptpp it is just it is almost identical to the wto accession process very lengthy and it basically requires the the the agreement from 11 existing members which could be quite tricky for korea uh considering korea japan situation and

also considering the the the failed fta between korea and mexico and also considering all the outstanding issues that korea has had with respect to its fta partners over the past decade so all those issues possibly could come up in the accession process for korea so korea's situation i think is different from uk uh so korea has already have korea has already korea has ftas with nine out of 11 states of cptpp members and those bilateral issues could come up in the careers accession process and the

question mark is how to deal with those issues how to how korea will deal with those issues and how other countries will put those issues on the table uh for the accession process so there's a big question mark uh for the membership uh process and membership fee uh hopefully 11 states and korea can find a solution and find a mutually beneficial solution for the membership of korea but that could be a lengthy and difficult process for korea i think and secondly again i hope united states can return to the cptp but

practically speaking it seems to be quite difficult or maybe too ambitious first to expect but hopefully united states can return to the cptp uh but at the same time one thing that we could consider from the perspective of the united states and also from the perspective of korea is the fact that the value or the attractiveness or the benefit of the cptpp may have dwindled over the years it used to be the most i i think the most innovative agreement at that time but after eight years many issues have

changed each investment chapter is now being uh is now being over being rewritten by other other fora in many different ftas and many different discussion forums investment chapter and digital economy chapter the the e-commerce chapter is also is being rewritten by other fora as well for instance the the australia and singapore the cptp partners have concluded their own digital economy agreement new zealand chile and singapore also the cptp partners concluded their trilateral digital economy agreement

that could signal that the cptpp's e-commerce chapter is not as elaborated or as updated as uh as as to be able to address the current uh the the tasks the current difficulties the countries are facing in the area of digital economy also state-owned enterprise chapter which is very controversial in many countries and still many many many practitioners and many government officials seem to be wondering about exact meaning of key provisions there including fisheries subsidies as well and sps chapter as well so all

those uh issues are very important and the these provisions set forth important norms for many countries but at the same time the rules still vary the rules still very advanced compared to alcep and compared to other ftas but at the same time the margin of superiority or the edge the cptpp's edge over ourselves or cptpps the the the freshness these are the other ftas have been dwindled and have been have been narrowed over the years so then the question mark is how many countries will could you lift up soon

sure minister will will will we assess the benefit of the cptpp in the changed landscape so there will be a question mark for career succession and perhaps a possibly u.s accession effort as well thank you i'll stop here thank you sorry to uh bother you but uh anyway thank you very much professor jamie lee for your very comprehensive analysis regarding cptpp and also each you know members uh ex you know the countries who want to join or may not join in the future the specific positions of these countries

and now move on to the last panelist professor uh wang hildi i think he will uh talk about the uh various issues uh related to uh u.s china uh strategy competition wt reforms cptpp south korean strategy maybe you know he's wrapping up all the discussion we have so far professor lee please you have eight minutes yes um thank you very much for uh having me uh and uh uh mr uh minister park and president uh joseon uh actually the eai gave me uh four questions and i will uh reply them one by one and uh let me be clear that biology

i totally agree with dr maria solis and professor lee jamin but because i'm a political economist and i will highlight the strategy aspects of the international trade okay let me start with the first question the impact of the u.s china strategy competition in the global and regional trade order i think uh that in terms of trade balances so far the trade war has no significant impact actually the full effects of export control on key industries are not yet to be seen although there are some trade diversion took place

in terms of trade balances i think the impact of the kovid 19 pandemic has much more visible in the early stage when the united states and china impose lockdown on key industrial areas and i expect that it will take a long time for the united states to shift its supply chain away from china let me move on to the second question the prospects of the wto reform and the expansion of the cptpp as long as the biden administration maintains an inward-looking trade policy china's grip on the wto will not be loosened

unlike the trump administration the biden administration tried to make a compromise with the eu and uk but there is still long way to go by the way as uh dr milo solis mentioned at the ap summit in november 2020 chinese president xi jinping said that china federally considered joining cptpp for this reason china can join the cptp earlier than anticipated and uh when it comes to certification i think there are broad consensus on its positive effect of the cp tpp as you know well uh cptpp is much more

ambitious than any other ftas including rsf in many aspects first of all cptpp will upgrade trade rules including labor and environment standard and digital trade also cptpp can provide a stepping stone to revive multilateralism in east asia finally cptpp will is trade tension in this region if the united states and china join together uh in terms of a lot of the japan the united kingdom and taiwan we have to consider many aspects of the cptpp and supply chains first of all japan has played a leading

role in launching the cptpp since the trump administration left i a tpp this reason i think japan's contribution is likely to grow because the country is at the heart of the regional supply chain uh regarding taiwan yes tsmc has already considered investing in japan to diversify supply chain away from china therefore japan taiwan rations will be strengthened but uh i am uh very skeptical of the role of the united kingdom as you know yeah uk is geographically distant and it's linked with the supply chain in east asia is a very

limited and i don't think that the uk will play a crucial role in this uh reason and a final question is about the possible south korea strategy i believe many uh the uh uh other panelists korea should join the cptpp as soon as possible actually cp tpp is an ally sharing in the strategic industry such as a semiconductor battery layout element and medicine such as a covet vaccine and cp tpp contribute a serving trade conflict between korea and japan and finally cptpp will help korea to diversify export market and therefore

reduce its high dependence on china let me stop here thank you very much thank you uh professor lee another purpose lee uh you tried to uh address uh all the questions uh raised by the conference organizer uh so far uh i don't see any questions raised by our online participants so i'll just move on to our own discussion among our panelists uh let me uh take this opportunity to ask a few questions to uh each of your uh panelists uh first of all uh the professor solis you talk about the us trade policy i mean trump and

also biden uh biden administration he himself said that he will respect the multilateral trading system and also he will work with the alliances but uh also if you want to say uh america is back you know i'll be leading the multilateral trading system whatever that kind of statement but he didn't do anything so far in terms of correcting something which was done by trump unilateral actions like you know the steel quota imposed on korea which is bad really this is like a voluntary expert restraint i mean

korea should not have accepted this kind of uh request from the united states but also he's maintaining all the tariffs imposed on chinese products all kind of things so he didn't you know he says something which is different from uh trump but he didn't do anything to show us you are we are now respecting more rules-based uh trading order or whatever so i want to see i want to see your uh opinion uh about this situation uh and and then i will ask professor jamin uh lee you know what uh at the end of june uh

the investigation results on supply chain of a few few important items and conductor battery and whatever so based on this kind of investigation the u.s administration and also u.s congress are starting to pour huge amount of money to the so-called you know advanced technology area specifically you know semiconductors and and things like that and uh the thing is you know you mentioned briefly about wt reform and one of the reform idea uh subjects should include uh subsidy agreement industrial subsidy agreement which is targeting uh

so-called china's industrial policy but uh while you are complaining about the u.s you know chinese industrial policy which is you know producing over capacity distorting trade lots of complaints and now they are doing you know maybe it's not the whole industrial policy but you know some specific area how do we see the future of uh some kind of improvement of industrial policy within the wto system lastly to professor wambi lee you briefly mentioned of the role of taiwan which means that taiwan may also apply

for exceeding to the the the cptpp in the future so this is my uh questions i mean i will start with uh dr solis um thank you so much uh for that excellent question uh president bark um i couldn't agree more with you i mean i think that there is an important change um but there's also very significant continuities in when we moved from president trump to president uh biden so i do think it makes a difference when you have an american administration who is willing to be more constructive in discussing wto

reform who is willing to coordinate more with allies and not bash them and who's not going to be fixated on the trade deficit as the metric by which all economic relationships are to be assessed but nevertheless there's a lot of skepticism in the current american administration on free trade and it's hard to say free trade now the word has to be free and fair trade and you know i think that types are addictive they create vested interest they create groups that want to protect now the new status cool

so i think that there's been a lot of resistance from the steel industry for example to see those targets eliminated and this continues to be a source of friction with allies and partners and the steel quota i couldn't agree with more with you that that was of course distorting it's a managed trade approach with europeans there have been some improvement recently on trade talks on subsidies for air aircraft manufacture but they have not yet found a way to eliminate the uh so-called 232 targets on aluminum steel

with talks still ongoing but i also think it's not just what the bio administration is keeping in place but where this might be going and i think professor lee already mentioned the recent supply chain study or report that the white house uh commissioned the there was a hundred day a report and it's really interesting because i do see it to me it's a contradiction if you will there is a desire to coordinate with allies and therefore the term that professor lee mentioned has already been also picked the allies showing right the idea

is that we want to build trusted supply networks therefore korean companies japanese companies taiwanese companies are companies that we should be doing more business with but on the other hand in the same report you have a lot of the same spirit of you know us first with the buy america provisions that are highlighted there with a fast what they call trade enforcement strike force something to that nature and at the end of the day i don't think that these tensions are being resolved and it's important if we really

want to build relations of trust that we send a message that we do not believe that trade agreements have been used unfairly always but that's something that this administration so far is not prepared to say and has to do a lot with the politics the support basis for the democratic party but i also think it's important that the american president goes to the region and hears from uh leaders as to how without this um you know it's very hard to compete with china if you're not going to be talking about let's sit at the table and

my last point this administration when they think about trade they're thinking a lot about labor standards about eliminating forced labor from our supply chains and promoting a race to the top i don't think you can do that if you're not at the table and therefore it's important to put the weight of the american market to make sure that these rules and these disciplines can really be adopted more broadly thank you uh dr solis how about uh professor jamie lee thank you thank you minister bach thank you for the very important

question uh that's right the many countries are now contemplating uh providing massive support for key industrial areas uh mainly the semiconductor area or other infrastructure related area uh all over the world including korea as well many countries are contemplating finding support packages for key industries in in their territories and united states as well is now considering providing massive support for the the the semiconductor industry in other related industries and the question then is the subsidies agreement that's i think

that's exactly right i think the the problem for now for the wto and for many countries now is there is the fact is that the subsidies agreement of the wto is outdated most importantly the fundamental problem of the subsidies agreement of the wto now is that it does not have a carve out for legitimate governmental industrial policies so be it copy 19 emergency measure or core industry support measure or environmental protection measure there's no cut-out at least legally in the subsidies agreement and those absence

that absence has raised concerns and has the foster disputes among many states and to some extent the u.s china dispute is also triggered by the absence of the norms on the one hand united states is complaining about china's industrial policy on the other hand china is making its own argument and then the the question mark and the the repeated mantra is that my support is okay but your support is a problem that type of approach has uh has has has raised concerns uh over the wto subsidy regime and i

think that regime should be changed and i think that issue is already being addressed by the united states and the eu and japan to carve out and to elaborate the subsidy norms in the the wt agreement in a way that can find that can distinguish good subsidies and necessary subsidies and bad subsidies so that uh so has to address the concerns of the states but in the meantime the current agreement applies and the support measures of the united states and support measures of other countries could be problematic

at least legally under the current legal prism that that is a problem i think thank you sorry thank you very much but you already already mentioned that wto should do start with the easy easy subject i i raised a very important and difficult subject but given that you know the decision-making mechanism of wto it will be awfully awfully difficult in the future to make any changes on subsidy issues let me now turn to professor wamhili how about taiwan taiwan's position uh yes thank you uh uh for very uh raising a

very uh interesting question uh minister bach actually yeah because uh after the uh semiconductor tease uh taiwan is very hot everyone is talking about tsmc taiwan semiconductor manufacturing company uh as you know well yes uh uh because because of the political sensitivity and chinese scholars of bureaucrat uh have no mention on taiwan one china policy constraint every uh relation with uh taiwan at the moment uh uh the domestic example is a dual uh circulation uh strategy i mean presented by the xi jinping

last year but there is no mention of taiwan this is a political reality but in terms of economics yeah there is a very different story actually taiwan is the largest importer to china in 2020. uh uh people then yes uh korea has been uh had been the largest uh importer from uh uh 2013 to 2019.

that means that yes taiwan a player crucial loan in almost every chinese industries especially in tsmc uh china's industry cannot survive i think without taiwan and semiconductors in this respect yes i i think uh china have every reason to strengthen not reduce i mean it's a supply chain with taiwan that means yes i think there is a some possibility time for taiwan can to join in cptp sooner or later yeah that's my answer thank you i have some questions uh from the uh organizer in the in the chatting

area the first thing this question is to me regarding the cptpp negotiation process for korea i mean actually uh professor jamin lee mentions korea's position i mean even until last year our official position of the korean government was very uncertain they didn't show any any you know positive or definite kind of positions uh at that time but when biden administration comes in korea's position changed a little bit into more positive direction but still they don't decide whether they really uh apply for official you know

membership to the or the the cptpp so still korea is considering because there are many issues jamie lee uh previously mentioned about the agricultural issues and automobile issues you know facing the japan korea relations so given this kind of difficulties how can korea do something so that we can join the cptpp i i think you know out of 11 existing cptp members we have fta bilateral ftas with nine countries except japan and mexico mexico all along doesn't want to have fta with korea that's my own experience they don't feel like any

benefit having fta bilateral fda korea but cptp is different so what i'm saying is here uh even though we may face some difficulties this can be overcome i mean we already give a lot more market access for agricultural product to united states why not give the same kind of uh access to canada or australia it's not really difficult i mean you can we can talk about this and also for our agricultural people we can give some support when we join the cptp and second they are worrying about our automobile

sector if you load the tariff to a japanese automobile export to korea we will be hurt but already through korea us fta japanese auto companies manufacturing in the united states they're coming into korea without hearing so uh it's also we can we can talk about this but technically we can resolve the issue and what about the political sensitivity between korea and japan i think because of that we should use non-economic area to promote our relations which means that the non-economic area means cptp is more economic

area not political area so this is a way for korea and japan to move toward more more like a more friendly or more normal kind of relationship rather than keeping the you know the country uh from each other talk about political issues so i think uh cptp i sometimes wrote an article in the newspaper i i said that you know we even though we want to join we cannot join right away at least we can apply officially just like the uk did to the cptp new membership and then wait and then go for the individual process

negotiation process if they these existing members are imposing too much uh kind of uh prices then we can we can say oh no we cannot join you because uh this is extraordinarily too much burden to korea but the thing is cptpp members should consider the benefits out of korea's joining to cptpp because korea is the ninth largest trading nation joint korea joined the cptpp make significance of the cptpp much much you know higher so i think uh you know both party has a mutual interest so that i i hope korea can join soon

uh maybe this government may apply for the membership uh officially or wait for the next couple i don't know but you know as a trade expert we have to do this kind of thing i spent too much time we have only four minutes left but uh there are some other questions uh especially the professor wang hili mentioned that maybe china joined the cptpp but we don't want to take too much time but china's accession to cptp china shows some interest but this realistically this is far from the uh you know real

real kind of uh option because china cannot join the cpt people at this moment but they just show some kind of interest well we have four minutes uh four minutes left i will give one minute to each panelist just you know give some impression or something starting with one wheelie professor turn onto your microphone turn on the microphone yes yeah yeah i said uh korea should join not can oh yes able to yeah that's that's what i mean yes uh uh korea uh uh as uh minister buck said yeah korea can benefit at joining

uh uh uh cptp or for many uh in industrial areas that's that's uh what i uh what i would like to emphasize yeah let's see purpose jamie lee thank you thank you minister bach i i also think that cptpp is very important for korea and korea should try to join the cptpp as as soon as possible and i think the question is not just the cptpp but the the norms and provisions conclude included in the cptpp are very indicative in other free trade agreements and the wto negotiations as well so the efforts to join the cptpp

could also help korea or other countries like korea such as thailand indonesia to cope with or to address future negotiations in other for us as well so in that regard cptp accession is important for korea strategically thank you and then uh professor solis thank you just a comment and i was i found it very very persuasive your comments on japan and south korea in the context of ctpdb and how that membership in that trading grouping could actually help advance the bilateral relationship i think that

that is a very positive way to move things forward i think if we were to define bilateral relations by just focusing on the issues where the tensions are very high the divisions are very deep it's very difficult to make progress but if we think about economic integration and advancing through the cptp advancing also through plurilateral digital trade agreements i also think a trilateral dialogue on supply chain resilience and export controls those might be avenues to try to again um address some issues that are

sensitive but nevertheless where the economic interdependence can actually provide an incentive to deepen the relationship so i think that after rsep it's easier to think about market access opening exercises between japan and south korea too okay i think we use up uh all the time given to us and there are you know one uh very long question raised by the panelists but i couldn't really respond to that question uh in in more detail i think we have a very nice uh uh and and productive or or very realistic you know kind of

discussions for uh current uh trade issues trade situation where we should go but the conclusion uh if i may is uh not very positive i mean we are in a very difficult challenging period and no there's no leader in in leading us to the more you know conducive and more rules based kind of international order and especially us become much more political i think the biden administration will not do anything specific until the next year november midterm election maybe after that maybe you know they are

thinking about joining the cptp or something like that other than that they want to do anything so that they can keep their you know major majority seats in the senate and then in congress or all kinds of things this is a pity but uh in the meantime middle power countries like korea and other other you know australia or canada whatever they are doing something even though we cannot make a huge challenge a few influences but we can say something so that we can respect the multilateral trading system

and open regionalism or whatever well uh with this i want to conclude but the organizer asked me to deliver this one last thing is the uh we asked the online participants to fill out a brief survey form regarding the today's webinar so that they can east asia institute can reflect this kind of comments uh for later or future uh webinar uh i think well i want to say uh uh i want to thank our panelists and also our our online participants and also i want to really thank those people who make uh uh

this website maybe not possible today's uh kind of webinar thank you very much we will conclude this thank you good evening dr solis okay thank you very much thank you thank you very much thank you you