Government: "CPTPP Will Raise Korea's GDP by 0.38%P, but Agricultural, Forestry, and Fisheries Production Set to Drop by 850 Billion Won Annually"

Preliminary Economic Impact Analysis of Korea’s CPTPP Accession

Sector-by-Sector Analysis: Macroeconomy, Manufacturing, SMEs, Agriculture, Fisheries, and Forestry

According to an analysis by a government-funded research institute, if Korea joins the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the nation’s gross domestic product (GDP) will be 0.38 percentage points higher ten years after the agreement takes effect. The opening of the market under the CPTPP is expected to boost production in manufacturing-based industries by up to 6.7 trillion won per year on average, but the production value of agriculture, forestry, and fisheries is projected to decrease by more than 850 billion won annually.

The Ministry of Trade, Industry and Energy, 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 jointly announced on the 28th the provisional results of an economic impact assessment related to Korea’s accession to the CPTPP, which was conducted in collaboration with relevant research institutes.

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A government official explained, "Since our 2021 analysis, the government has been supplementing its previous assessment to reflect the expansion of CPTPP member countries, changes in major countries’ trade policies, and evolving domestic and international industrial and trade conditions. Based on recent data, we analyzed the impacts by sector, including the macroeconomy, manufacturing, SMEs, agriculture, fisheries, and forestry."

The Korea Institute for International Economic Policy forecasted that, according to a macroeconomic analysis, Korea’s real GDP ten years after CPTPP comes into force will be 0.38 percentage points higher than if the country does not join the agreement. This increase represents the cumulative effect over ten years following the agreement’s entry into force, not an annual growth rate.

With market opening, the production spillover effect in manufacturing is expected to reach up to 6.7 trillion won annually, while the production value of agriculture, forestry, and fisheries will decline by 852.3 billion won each year. Specifically, over a 15-year period after the agreement’s effect, the average annual production spillover coming from tariffs cuts on manufacturing items—impacting both manufacturing and related upstream and downstream industries—is estimated to increase by 6.3 trillion to 6.7 trillion won. Of this, the effect on SME-based industries is analyzed to be approximately 1.1 trillion to 1.2 trillion won. On the other hand, over 15 years following the agreement’s activation, annual average production in agriculture is expected to fall by 710 billion won, forestry by 60.6 billion won, and fisheries by 81.7 billion won.

These results are provisional forecasts estimated using an economic analysis model under certain assumptions. The government noted that the actual impact could vary depending on the level of item-by-item market opening, which will be determined by the outcome of future accession negotiations and domestic and international market conditions at that time.

A government official added, "We decided to release the provisional results early so the public can transparently understand the potential impact of joining the CPTPP on our economy and industry, and to sufficiently seek feedback from all stakeholders. We will continue to provide information through briefings, discussions, and other communication channels to explain the results of the analysis and CPTPP-related matters and to collect feedback from interested parties."

This content was produced with the assistance of AI translation services.