The South Korean government has released an analysis indicating that if the country joins the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), its real Gross Domestic Product (GDP) could be 0.38 percentage points higher after 10 years compared to not joining. While manufacturing output is projected to increase by an average of 6.7 trillion won annually over the next 15 years, the agriculture, forestry, and fisheries sectors are expected to see an average annual decline in production of about 850 billion won.
On September 28, the Ministry of Trade, Industry and Energy, along with the Ministry of Agriculture, Food and Rural Affairs, the Ministry of Oceans and Fisheries, the Ministry of SMEs and Startups, and the Korea Forest Service, released preliminary results of an economic impact analysis conducted with relevant research institutions.
The CPTPP is a multilateral free trade agreement led by Japan, currently involving 12 countries, including Mexico and Australia, following the United Kingdom's accession in 2024. South Korea has not signed bilateral free trade agreements with Japan and Mexico. The member countries have a combined population of approximately 580 million, accounting for 15% of the world's GDP.
The government updated its analysis for the first time in over five years, reflecting changes in CPTPP membership, major countries' trade policies, and domestic and international industrial and trade conditions.
According to the Korea Institute for International Economic Policy (KIEP), South Korea's real GDP is estimated to be 0.38 percentage points higher after 10 years of CPTPP implementation compared to if the country had not joined. This figure represents the cumulative effect over the decade following the agreement's implementation, including direct benefits from tariff reductions and additional benefits from expanded participation in regional supply chains.
Sectorally, the analysis shows a mixed impact on manufacturing and agriculture, forestry, and fisheries. The Korea Institute for Industrial Economics and Trade predicts that the manufacturing sector will see an average annual increase in production of between 6.3 trillion and 6.7 trillion won over the 15 years following the agreement's implementation. This figure includes production effects from both direct changes in manufacturing tariffs and the resulting impacts on related industries.
Of this, the production impact based on small and medium-sized enterprises is expected to reach between 1.1 trillion and 1.2 trillion won annually.
Conversely, the agriculture, forestry, and fisheries sectors are projected to experience unavoidable production declines due to market opening. The Korea Rural Economic Institute estimates that agricultural production will decrease by an average of 710 billion won annually over the 15 years following CPTPP implementation, while forestry production is expected to decline by about 60.6 billion won annually.
Analysis from the Korea Maritime Institute indicates that fisheries production will also decrease by an average of 81.7 billion won during the same period. When combined, the total production decline across agriculture, forestry, and fisheries is estimated to be around 850 billion won annually.
The government emphasized that these analysis results are preliminary estimates based on certain assumptions and economic modeling. The actual impact may vary depending on the level of market opening for specific items, negotiation outcomes, and domestic and international market conditions as membership negotiations progress.
In the past, the government has publicly shared the economic feasibility of trade agreements through public hearings. However, in the case of the CPTPP, it decided to release the preliminary results early to inform the public about the potential economic and industrial impacts and to gather opinions from various sectors.
A government official stated, "We plan to explain the results of this analysis and CPTPP-related matters through briefings and discussions, and we will broadly listen to concerns and difficulties that are hard to quantify, incorporating them into future review processes."
* This article has been translated by AI.
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