Since Korea is not a part of the Trans-Pacific Partnership agreement, it’s likely to suffer huge export losses over the next 10 years. Korean companies' exports to 12 member TPP nations, made from their manufacturing bases in Vietnam, are expected to drop $620 million a year and their shipments via global supply networks in Mexico are also expected to drop $290 million.
The estimated export losses for the textile industry are $420 million. Although Korea has already signed FTAs with 10 of the 12 TPP members, the price competitiveness of Korean exporters, applied by complicated rules of origin, cannot help but lag behind those of their counterparts in member nations, which are applied by a uniform set of completely cumulative rules of origin.
The US-led free trade agreement is expected to abolish all import duties among its signatories. If Korea is excluded from the Asia-Pacific global supply networks to be created by the TPP, it would adversely affect the nation’s export of parts and materials, directly and indirectly.
Korea’s reliance on global value chains has increased since 2008. If the country joins the FTA, it will help Korean exporters make the most of their supply networks and set up new business models.