Manufacturing to Gain 6 Trillion Won, Agriculture and Fisheries to Lose 850 Billion? The ‘Illusion’ Hidden in the CPTPP Impact Analysis

Limitations in Direct Comparison Due to Differences in Industry Scale and Calculation Methods
Detailed Data by Sector and Product Not Disclosed

Yonhap News Agency

The government has disclosed its first economic impact analysis of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). However, some point out that the provided figures are insufficient to clearly judge the gains and losses by industry. While the manufacturing sector is projected to benefit from an annual production increase of over 6 trillion won, the agricultural, forestry, and fisheries sectors are shown to face a decrease of about 850 billion won. This creates an impression of overall large net gains, yet the different scales of these industries and the varied methods of analysis make straightforward comparison difficult. In addition, the government did not release detailed breakdowns showing which specific manufacturing sectors would benefit and which agricultural or fishery products would be most adversely affected.

According to relevant ministries such as the Ministry of Trade, Industry and Energy and the Ministry of Agriculture, Food and Rural Affairs on the 29th, results of the economic impact analysis of the CPTPP, conducted with research institutions, estimate that Korea's real GDP will be 0.38 percentage points higher ten years after the agreement takes effect compared to non-membership.

By industry, the production spillover effect in the manufacturing sector is expected to increase by 6.3 trillion to 6.7 trillion won annually, on average, over the 15 years following the agreement’s implementation. Of this, the effect attributable to small and medium-sized enterprises amounts to 1.1 trillion to 1.2 trillion won. In contrast, production in the agriculture sector is projected to decrease by 710 billion won annually, forestry by 60.6 billion won, and fisheries by 81.7 billion won. The combined reduction of the agriculture, forestry, and fisheries sectors amounts to about 852.3 billion won, roughly one-seventh the increase seen in manufacturing.

However, when focusing solely on absolute figures, the real impact on each industry may be obscured. According to the Ministry of Data and Statistics' 2024 Mining and Manufacturing Survey, the annual shipment value for mining and manufacturing companies employing 10 or more people is 2,090.2 trillion won. When compared directly, the CPTPP’s estimated 6.3 trillion to 6.7 trillion won annual production spillover effect amounts to only about 0.30% to 0.32% of total shipment value.

In contrast, agricultural production in 2024 will be approximately 60.8 trillion won. An annual decrease of 710 billion won corresponds to roughly 1.2% of total production. For domestic fisheries, the production value in the same year stands at 10.0918 trillion won, so the expected decrease of 81.7 billion won due to the CPTPP is about 0.8% of the total.

While the absolute increase in manufacturing outweighs the decrease in the agriculture and fisheries sectors by a large margin, considering the size of each industry paints a different picture of the actual impact. Furthermore, if damages in the agriculture and fisheries sectors are concentrated in certain products or regions, the shock to individual producers could be significantly greater than the industry-wide average.

What is more concerning is that, strictly speaking, the figures for the manufacturing and agricultural, forestry, and fisheries sectors released by the government are not even based on the same concept. The government describes the 6.3 trillion to 6.7 trillion won for manufacturing as a “manufacturing-based production spillover effect.” This represents the combined production generated not only in manufacturing but also in upstream and downstream related industries due to tariff changes on manufacturing items.

On the other hand, the figures for agriculture (710 billion won), forestry (60.6 billion won), and fisheries (81.7 billion won) represent the actual production decrease within those sectors. By presenting these figures side by side, which were calculated through different methods, there is a risk they may be mistakenly interpreted as an industry-wide profit and loss statement resulting from joining the CPTPP.

Regarding this, a government official stated: “These analysis results are provisional estimates derived from economic analysis models based on certain assumptions. The actual impact could differ depending on the level of market opening for each product and domestic and international market conditions once accession negotiations proceed. Going forward, we plan to explain the results through briefings and meetings, and to broadly gather feedback on impacts not easily captured by numerical data and concerns raised in the field.”

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